The “Loss" in the portfolio, used to estimate the impact in the agricultural sector and the contingent appear to be conservative, the estimation is based on nation-wide yields, and therefore it is possible that some producers suffer bigger losses, even below the 20% trigger of the current instruments. This is a caveat of the analysis, and it is recommended to perform a sub-national analysis based on Eurostat data at NUTS2 level (Nomenclature des unités territoriales statistiques). The Value-at-Risk (VaR) is used to estimate Contingent Liability (CL), and it measures the Loss that Liabilities for each product due to production losses, as measured by the Value at Risk (VaR). The diversification, which arises from the no-perfect correlation among products, significantly re- duces Contingent Liabilities. The CL without diversification is calculated as the sum of the VaR of each crop, a highly conservative estimate that implicitly assumes all crops are perfectly positively correlated. In turn, the portfolio VaRs were estimated, considering the diversification effect among products. When crops are not perfectly correlated, adverse events affecting one product are less likely to impact others to the same extent, resulting in lower overall risk for the portfolio. For example, at a 1 percent exceedance probability, the VaR without diversification is EUR 505 million, and therefore the diversification benefit cation benefit ranging from EUR 197 million to EUR 14 million. tor's systemic risks. By considering diversification stakeholders can achieve more accurate risk estimates, reduce unnecessary capital reserves, and design tailored financial instruments that better match the true risk profile. Ultimately, this approach improves the effciency and sustainability of risk management. To mitigate the contingent liabilities arising from agricultural production shocks, we propose an illustrative example of portfolio of potential financial instruments. These examples demonstrate a layered DRF approach, strategically combining risk retention and risk transfer mechanisms to enhance