This comprehensive research document reviews policy options available to governments in its objective of protecting rural household incomes, and a focuses on those risks that are most unpreventable and on insurance mechanisms for those risks. Range of risk vary, and this document seeks to address real sources of risk for governments. Production variability arising from unreliable fertilizer deliveries can often be resolved by consistent import policies and improved transport, distribution and storage systems. Likewise, some weather-related risk may be diminished through irrigation investments, which also contribute to increased production. Many risks cannot be prevented in this way and may require appropriate instruments that provide compensation when sever losses occur. Insurance has an important role to play in this context and the document provides more information on this mechanism.