senior couple strategic planning in continuing care retirement communities focused on risk appetite

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Continuing care retirement communities: Integrating risk appetite and tolerance into strategic planning

Sept. 16, 2025 · Authored by Norris James

Continuing care retirement communities (CCRCs) face the challenge of balancing resident care, regulatory compliance and financial sustainability. To navigate this complexity, boards and C-suite leaders must integrate risk appetite and tolerance into their strategic planning processes. This integration is not just beneficial — it is essential for ensuring the well-being of residents, maintaining stakeholder confidence and securing the community's long-term success.

Understanding risk appetite and tolerance

Risk appetite provides insight into the amount and type of risk an organization is willing to accept to achieve its strategic goals. Conversely, risk tolerance sets the specific boundaries within which the organization will operate as it manages individual risks. These concepts provide a strategic tool for boards and C-suite leaders, clarifying which risks are necessary for growth and which are unacceptable based on organizational values and capacity.

Creating and adopting a well-defined risk appetite and tolerance framework aligns risk-taking with strategic goals, fosters consistency and transparency in decision-making and empowers leaders to seize opportunities confidently while avoiding unacceptable exposures. By embedding these principles into strategic planning, leadership ensures that risk is managed proactively and strategically — transforming it from a threat into a catalyst for sustainable growth and resilience.

Strategic alignment: Safeguarding mission and growth

Defining, creating and integrating risk appetite into the organization allows for growth and innovation while protecting the CCRC’s mission. By setting clear risk boundaries — such as acceptable debt levels, occupancy targets and market exposure — leadership can prioritize initiatives that align with resident needs and organizational resilience. Insights foster cohesive decision-making and ensure strategic objectives support quality care and financial health. A well-defined risk appetite enables CCRCs to invest confidently in new services, facility upgrades or care innovations grounded in a shared understanding of acceptable risk.

During the 2008–2010 recession, for example, many CCRCs faced serious challenges due to over-leveraging and unclear risk limits. WindsorMeade — a CCRC in Williamsburg, Virginia — opened in 2008 with $114 million in bonds but was forced to file for Chapter 11 bankruptcy amid financial distress, only saved by restructuring and significant debt reduction. Conversely, projects with well-defined risk appetites, such as maintaining strong reserves and limiting variable-rate debt, fared better in occupancy retention and resident security.

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board governance

Conclusion

For CCRCs, integrating risk appetite and tolerance into strategic planning is imperative for value creation, resident well-being and organizational resilience. Communities that embed these principles into their planning unlock superior decision-making, stakeholder confidence and sustainable growth. By transforming risk from a threat into an opportunity, CCRCs can ensure a thriving future for residents and staff.

Key takeaways

Well-defined risk appetite and tolerance frameworks provide CCRCs with the structure to make informed, agile and confidence-inspiring strategic decisions.

Clear thresholds and ongoing monitoring help balance innovation with prudence, protecting residents, staff and the community’s reputation.

Historical evidence shows that CCRCs with transparent, quantified risk management practices outperform both excessively bold and overly cautious peers when facing economic shocks, regulatory changes or unexpected crises.

This approach is not theoretical — it is evidenced by both the successes and failures of CCRCs that have embraced or neglected risk appetite integration in their strategic planning

Questions boards should ask

Boards looking to adopt, utilize and integrate risk appetite and tolerance into strategic planning to drive deeper, more effective oversight of their leadership should consider the following questions:

What is our risk appetite? Is it explicitly aligned with our core strategic objectives/pillars? What risks are we willing, and unwilling, to take to pursue these goals?

What measurable thresholds or limits define our risk tolerance? How are these embedded into day-to-day decision-making and major strategic initiatives?

 In what ways are risk appetite and tolerance integrated into our strategic planning processes, such as scenario analysis, capital allocation and performance measurement?

What governance structures and accountability mechanisms are in place to ensure that risk appetite is consistently applied and that risk-taking stays within approved boundaries?

What are our assumptions about risk? What steps are taken to address potential blind spots or biases in risk reporting and strategic decision-making?

What are the most critical risks we should be willing to take to achieve strategic goals?

How do we balance ambition with caution when defining our organization's risk boundaries?

What external factors or stakeholder views should influence how we set and communicate risk limits?

These questions can help:

foster a culture of informed challenge

ensure risk appetite is a living part of strategic planning

and help boards fulfill their duty of care in guiding the organization toward responsible growth and resilience.

Boards and C-suite leaders must prioritize integrating risk appetite and tolerance into their strategic planning activities. Connect with us to help ensure your CCRC serves as a resilient, innovative and trusted cornerstone that delivers on its promise of security, care and peace of mind for every resident.

Key metric	Resilient CCRCs maintain	Troubled CCRCs often show
Days cash on hand	120–200+	Less than 90
Occupancy rate	90% or higher	Below 85%
Operating revenue vs. expenses	Within 5–10%	15% gap or more
Debt coverage ratio	>40% cash to debt	<25% cash to debt
Bankruptcy rate	0.3% per year	Higher in poorly managed orgs

Continuing care retirement communities: Integrating risk appetite and tolerance into strategic planning

Understanding risk appetite and tolerance

Strategic alignment: Safeguarding mission and growth

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Key stat

Informed decision-making amid complexity

Key stat

Building stakeholder confidence and strong governance

Resilience and adaptability in a changing landscape

Competitive differentiation and sustainable innovation

Lessons from the field

Contrasting outcomes

Metrics that matter

Implementation road map for CCRCs

Conclusion

Key takeaways

Questions boards should ask

These questions can help:

Let’s go there, together.