John,
These are black swan events and odds of this happening are very very small. However, there are usually signs that show market weakness. When we reach delta on the put side around mid 20s we’ll buy an OTM option(s) to cut downside exposure. In that event, if the market was to move 5% lower in a day, that OTM option would actually save the position from getting blown out.
Now, about being hedged with 4 positions. Having 4 positions at once really doesn’t hedge or diversify. When the market goes down and volatility spikes all 4 positions will need to be adjusted or closed. We had several positions on in August 2015 when the market ‘crashed’. We managed to close one for a small loss while the other position hit our stop and the loss didn’t come from a big move down but a pretty sharp reversal higher. My point is that upside risk is still greater than the downside risk for Iron Condors, in my opinon.