Exposure tells you what might happen at a coordinate. Headroom tells you how much room the actual building has before it matters. One is a weather forecast. The other is whether the roof leaks.
How much margin before failure
Measured against scenarios: historical events, modelled probabilities, climate-adjusted futures. The threshold is the failure point. Headroom is the distance from it.
Which domain limits the asset's runway
Every asset faces stress across multiple domains: the building itself, the business it houses, its dependencies, its market. The constraint with lowest headroom relative to planning horizons is what matters.
Can the position improve, and at what cost
Headroom without capacity is false comfort. Capacity without headroom is too late. The combination determines what to do: intervene, exit, price, or monitor.
Headroom, binding constraints, and capacity - applied to your portfolio.
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