Your shield resets to full health between missions. It can be repaired with certain items and abilities while in combat. As far as mission structure goes, each mission is designed to contain several combat encounters, and I hope players would not want to retreat prior to finishing objectives, unless the party is in really dire straights. Certain players are going to want to keep fighting tooth and nail until they are defeated, but I understand others would favor a tactical retreat. It is a difficult balancing point to maintain, and I had not considered the possibility of retreating from perceived danger. I am trying to be more cognizant of maintaining room for player expression. At least with a paramilitary feel, the Host can lightly dissuade the party from abusing retreating to reset shields. There are also other design options to dissuade the behavior, like preventing it entirely with the pursuit ability in Pokémon, or doing what darkest dungeon did, and having retreats be a big risk since they could fail, and the enemy can get in some free hits when retreating.
RE: Project Burner Dev Log 3: Health Systems and Damage