Note X – Risk Management

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Significant Changes to Note X – Risk Management

Note X – Risk Management

Changed in 2025 -

Clarified that risk pool participants are not required to include detailed information about every coverage provided by the pool and that general descriptions are adequate. [Note: Need to delete this sentence if we delete new sentences below - see other comment].

Also updated authoritative guidance from GASB Statement 10 to GASB Codification Section C50 Claims and Judgments.

Note X – Risk Management

A template for this note is not available. See “Instructions to preparer:” for various disclosures that may be required.

Instructions to preparer:

A city/county/district should disclose:

  • a description of the types of risk the city/county/district faces and how it is handling those risks; and

  • any significant reduction in insurance coverage from the previous year (by risk category); and

  • an indication whether the total amount of settlements exceeded insurance coverage for each of the past three fiscal years.each of the past three fiscal years.

If the city/county/district participates in a risk pool, it should describe that arrangement. The description should specifically address the rights and responsibilities of the government and the pool. The city/county/district does not need to list detailed information for every coverage type provided by the risk pool, a general description of the arrangement and coverage provided is adequate.

If a city/county/district retains some risk of loss, it should make the following disclosures:

1. a description of what the liability for unpaid claims represents and how it is calculated (this discussion should mention whether non-incremental claims adjustment expenses have been included as part of the liability for claims and judgments);

2. if the city/county/district exercises its option to discount claims liabilities or has entered into any structured settlements, the nondiscounted carrying amount of any liabilities reported at a discounted value and the range for interest rates used for discounting;

3. claims defeased through annuity contracts (unless beneficiaries have signed an agreement releasing the government from all further obligation, and the likelihood of further payments is remote); and

4. a tabular reconciliation of the claims liability for both the current fiscal year and the prior fiscal year, using the following format:

  • claims liability (beginning of year)

  • claims incurred during the year

  • changes in the estimate for claims of prior periods

  • payments on claims

  • other (for example, change in the methodology used to estimate claims)

  • claims liability (end of year).

For more information refer to the Governmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial Reporting Standards Section C50 "Claims and Judgments".