# Continuity Endowment Sizing **Domain:** Continuity / Finance / Fiduciary Design **Doc Type:** Economic Method Node **Maturity:** Developed **Related:** [[wiki/Continuity Finance|Continuity Finance]], [[wiki/Financial Assurance|Financial Assurance]], [[wiki/Cost of a Continuant|Cost of a Continuant]] --- ## Definition **Continuity endowment sizing** determines how much segregated capital is needed to fund a defined continuity obligation without relying on the continuing generosity or solvency of the original sponsor. ## Basic Model For a finite horizon of \(n\) periods, the starting reserve can be modeled as the present value of expected service costs plus risk margins: \[ E_0 = \sum_{t=1}^{n}\frac{\mathbb{E}[C_t]}{(1+r_t)^t} + M_{model} + M_{tail} + C_{transition} \] Here \(r_t\) is a defensible net return after fees and taxes, \(M_{model}\) covers estimation error, \(M_{tail}\) covers low-frequency high-severity events, and \(C_{transition}\) funds migration or receivership. A perpetual promise requires a sustainable spending rule and cannot be justified by dividing current annual cost by an optimistic return assumption. ## Required Stress Tests - low or negative real investment returns; - energy and hardware price shocks; - correlated custodian and infrastructure failure; - mandatory migration after format or platform obsolescence; - cyber recovery and evidentiary reconstruction; - longevity beyond the planning horizon; - growth through forks, successors or added service rights. ## Governance The reserve should be bankruptcy-remote, independently governed and restricted to its continuity purpose. Beneficiaries need transparent assumptions, periodic actuarial review, triggers for contribution increases and a lawful process for changing benefits. A nominal reserve controlled by the service vendor is not an endowment if ordinary creditors can reach it. Endowment adequacy is therefore both a financial and constitutional question: an underfunded promise transfers termination power to whoever controls the shortfall. ## See Also [[wiki/Actuarial Modeling of Institutional Mortality|Actuarial Modeling of Institutional Mortality]] · [[wiki/Continuity Receivership|Continuity Receivership]] · [[wiki/Custodial Insolvency|Custodial Insolvency]] · [[wiki/Service-Level Governance|Service-Level Governance]]