Key Takeaways
- Contingency plans define trigger thresholds, immediate actions, medium-term adjustments, and escalation criteria for each stress scenario.
- Three reserve layers: operating (3–6 months), capital (system replacement schedule), and strategic (10–15% of equity).
- Total reserves should be 15–20% of annual gross revenue, held in liquid, accessible accounts.
- Resilient portfolio design: low leverage (<65% LTV), fixed-rate bias (70%+), geographic diversification, and workforce housing focus.
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Test Your Knowledge
1.What is the recommended cash reserve target for portfolio resilience?
2.What is the most effective strategy for protecting a portfolio against catastrophic events?
3.How should portfolio design incorporate resilience considerations?