Understanding what it means to build and operate a resilient portfolio

“This technological revolution is going to bring us so much more data,” said Dr. Ashby Monk, executive and research director at the Stanford Research Initiative on Long-Term Investing, in a recent conversation with Mark Wood, ESG team member at Callan, for the Callan Institute’s ESG Interview Series.

Monk has written, researched, and worked extensively in recent years developing an understanding for how and why it is so valuable for portfolios to emphasize resiliency. He points out the difference between resiliency and robustness. Robust portfolios attempt to be insensitive to shocks, while resilient portfolios seek to be well-suited to adapt to shocks.

Portfolios that aim to be robust often operate with an incomplete set of risk concepts and only include a peripheral role for ESG, wrote Monk and his co-authors Dr. Soh Young In and Dr. Dane Rook in their 2021 paper, “The Resilience Manifesto: Integrating ESG and Risk Management, in Investment Portfolios and