The “Loss" in the portfolio, used to estimate the impact in the agricultural sector and the contingent lia- bility of the government, is defined as any deviation below the average. Even though this might appear to be conservative, the estimation is based on nation-wide yields, and therefore it is possible that some produc- ers 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 at least based on Eurostat data at NUTs? 2 level . 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 reduces 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 products are perfectly positively cor- related. 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 oth- ers to the same extent, resulting in lower overall risk for the portfolio. For example, at a 1 percent exceed- ance probability, the VaR without diversification is EUR 1,115 million, and therefore the diversification sification benefit ranging from EUR 455 million EUR 33.7 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 profle. Ultimately, this approach improves the efficiency and sustainability of risk management. To mitigate the Contingent Liabilities arising from agricultural production shocks, we propose an illustrative example of a portfolio of financial potential instruments. This example demonstrates a layered DRF approach, strategically combining risk retention and risk transfer mechanisms to enhance portfolio must be carefully studied in further stages.