An emergency reserve is a municipal fund designated to address unexpected events, disasters, or urgent situations that exceed normal budget capacity. Unlike specific reserves for predictable needs (equipment replacement, facility maintenance), emergency reserves provide financial flexibility for truly unforeseen circumstances—natural disasters, infrastructure failures, public health emergencies, or major unexpected costs. Prudent financial management maintains emergency reserves at levels sufficient to handle reasonably foreseeable emergencies without requiring emergency borrowing or drastic service cuts. Target levels often equal several weeks or months of operating expenses. Emergency reserve policies specify what constitutes eligible uses, approval processes, and replenishment requirements after draws. While major disasters may access provincial disaster financial assistance, emergency reserves help municipalities manage initial response costs and smaller events that don't qualify for external assistance.