In a world of never-ending uncertainty and fiscal challenges, governments need to be resilient and have leaders in place that recognize the importance of financial resilience. GFOA’s task force on financial resiliency has identified characteristics of a resilient organization:
- They accept uncertainty and embrace change. They learn from past experiences, explore new ideas, and evolve.
- They build systems that can withstand shocks and stresses. They avoid single points of failure, develop backup plans, and diversify their risks.
- They think broadly about what influences their financial health. Financial health is seen as the responsibility of all public officials and staff, not just finance officers.
- They evolve to adapt to new conditions and foster collaboration between finance officials and non-finance officials. They can mobilize resources from a variety of sources.
Resiliency has an impact on a variety of local government finance functions including budgeting and planning, risk management, and leadership. GFOA identified the following best practices related to resiliency.
Budgeting and Planning
- Long-Term Financial Planning- GFOA recommends that all governments regularly engage in long-term financial planning
- Disaster Planning- GFOA recognizes the importance of disaster preparedness and management, and recommends that local jurisdictions incorporate resiliency into the capital planning process to produce a sustainable community and mitigate the effects of disasters.
- Appropriate Level of Unrestricted Fund Balance - GFOA recommends that governments establish a formal policy on the level of unrestricted fund balance that should be maintained in the general fund for GAAP and budgetary purposes.
- Creating a Comprehensive Risk Management Program - GFOA recommends that governments develop a comprehensive risk management program that identifies, reduces or minimizes risk to its property, interests, and employees.
- Key Issues in Succession Planning- GFOA encourages governments to address the following key issues and develop strategies concerning succession planning.
- Business Preparedness and Continuity Guidelines- GFOA recommends that governments develop, test, and maintain a plan to continue their basic business operations during and immediately after disruptive events.
- The Public Finance Officer's Role in Supporting Fiscal Sustainability - GFOA recommends that finance officers take an active role in their governments efforts to think and act sustainably. Below are a number of tasks that the finance officer can undertake to support sustainability.
100 Resilient Cities (Rockefeller Foundation): 100 Resilient Cities—Pioneered by the Rockefeller Foundation (100RC) is dedicated to helping cities around the world become more resilient to the physical, social and economic challenges that are a growing part of the 21st century. 100RC supports the adoption and incorporation of a view of resilience that includes not just the shocks—earthquakes, fires, floods, etc.—but also the stresses that weaken the fabric of a city on a day to day or cyclical basis.