GFOA Teams with Aon to Mitigate Natural Disaster RiskDownload Full Release
GFOA recently announced that it's teaming with Aon plc (NYSE: AON), a leading global professional services firm, on a first-of-its-kind initiative to provide local U.S. governments with state-of-the-art tools to help them better analyze and plan their rainy day funds.
Local government rainy day funds are critical for managing exposure to risks like economic downturns and natural disasters. According to a recent report from the National Oceanic and Atmospheric Administration (NOAA), the United States experienced 18 billion-dollar disasters in 2022, totaling more than $165 billion in damage. The frequency of these costly disasters has been increasing in recent years, and the trend is likely to continue into the foreseeable future.
When planning for potential disasters, local governments perennially ask themselves “how much is enough” to keep in the rainy day fund? To help answer this question, GFOA is teaming with Aon to grant GFOA access to data on natural disaster exposure in local communities, enabling GFOA to build risk models with comparable analytical techniques that insurance companies use to develop coverages. The data is stored by GFOA in a unique open standard, developed by ProbabilityManagement.org, a partner of GFOA. This allows the data to be easily integrated into Microsoft Excel, providing users with full access to the range of insights provided by Aon.
In fact, Aon and GFOA have already completed a successful pilot of this project in which Aon’s data was used to build a risk model. “The City of Providence had a Rainy Day Fund Ordinance that had become antiquated and in need of update. As part of the Results for America’s City Budgeting for Equity and Recovery program, we worked with GFOA to analyze what our reserve levels should be, create a comprehensive fund balance policy, and update the Rainy Day Ordinance. The team at GFOA was incredibly helpful and the data provided by Aon was critical in building the risk model we used for analysis. Using the model, we were able to create a fund balance policy that will protect our taxpayers against future economic shocks and protect its most vulnerable residents,” said Krystle Lindberg, Deputy Finance Director & Budget Officer for the City of Providence.
- Publication date: March 2023