By: Udaibir Das
The following paper originally appeared as part of The Institute of Sovereign Investors’ The Long Arc Series on May 19, 2026.
Sovereign funds remain part of the sovereign's wider financial condition even when operationally independent. This paper argues that the post-2008 governance settlement, while still essential, no longer captures the risk that now matters most: the systemic interaction of portfolio, fiscal, reserve, and external exposures under stress. It names this Systemic Sovereign Financial Risk (SSFR) and proposes Sovereign Resilience Management (SRM) as a diagnostic framework for addressing it.
Drawing on the public sector balance sheet literature, the economics of sovereign self-insurance, and the Knightian distinction between risk and uncertainty, the paper argues that conventional sovereign asset-liability management is necessary but incomplete. SRM operates as a diagnostic layer rather than a directive one, leaving investment autonomy and the Santiago Principles intact; it asks whether the totality of public financial assets is coherent relative to the totality of sovereign risks. The paper concludes that coherent stewardship of public assets is itself an expression of sovereign capacity.
Udaibir Das is a Visiting Professor at the National Council of Applied Economic Research, a Senior Non-Resident Adviser at the Bank of England, a Senior Adviser of the International Forum for Sovereign Wealth Funds, and a Distinguished Fellow at the Observer Research Foundation America.