Strengthening Investment Portfolios through Resilience – A Primer

26 Pages Posted: 20 Dec 2023

See all articles by Herman Bril

Herman Bril

affiliation not provided to SSRN

Willem Schramade

Nyenrode Business University

Date Written: December 18, 2023

Abstract

Traditional investment paradigms fall short in the current era of interconnected challenges, which include rapid technological shifts, geopolitical changes, and environmental pressures. In this new polycrisis regime, it is imperative to adopt scenario thinking and build resilience to strengthen investment portfolios. Conventional investment models, which were previously considered adequate, are now insufficient, and we are facing a resilience gap at both the corporate/asset level and the portfolio level. To address this issue, this paper advocates for an adaptive investment strategy that emphasizes the importance of resilience thinking. We suggest departing from narrow financial models and instead evaluating outcomes, understanding externalities as real options, and assessing company resilience. Additionally, active ownership plays a crucial role in enhancing portfolio resilience. Our goal is to contribute to the development of a resilient investing framework that enables investors to navigate current challenges and anticipate future uncertainties effectively. However, further research is necessary to create a more comprehensive approach to resilient investing.

Keywords: investing; resilience; sustainable investing; sustainable finance

JEL Classification: G11

Suggested Citation

Bril, Herman and Schramade, Willem, Strengthening Investment Portfolios through Resilience – A Primer (December 18, 2023). Available at SSRN: https://ssrn.com/abstract=4667697 or http://dx.doi.org/10.2139/ssrn.4667697

Herman Bril

affiliation not provided to SSRN

Willem Schramade (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

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