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The critical hinge through which substitution risk enters capital relationships. Even when rarely exercised, the existence of renewal discretion shapes institutional behaviour ex ante. Capital providers retain latitude to reassess priorities, tolerance, or alignment, and this discretion is sufficient to alter institutional risk calculations.
A foundation's grant renewal is discretionary: even if historically reliable, the institution cannot know with certainty that renewal will occur. This uncertainty creates anticipatory compliance.
CESIA Section 3