Physical location of the catalog
You should place the catalog database on a different server than the target database. If you fail to do this, you jeopardize backup and recovery operations, because you make it possible to lose both the catalog and target databases.
The catalog can coexist in a database used for other applications. The advantage to this is that you leverage existing resources. The disadvantage is that the performance and availability of your catalog can be affected by other applications within the same database.
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