# Non-Custodial Risk Management ⎊ Area ⎊ Resource 2

---

## What is the Management of Non-Custodial Risk Management?

Non-custodial risk management involves implementing risk controls without taking possession of user assets. In decentralized finance, this means protocols manage risk through smart contract logic and automated mechanisms rather than centralized oversight. The management framework must ensure protocol solvency and prevent excessive leverage.

## What is the Security of Non-Custodial Risk Management?

Security in non-custodial risk management relies on transparent, auditable code and decentralized governance. The protocol's design must prevent malicious actors from exploiting vulnerabilities to drain funds or manipulate markets. This approach shifts the responsibility for asset security from a central entity to the underlying blockchain technology.

## What is the Protocol of Non-Custodial Risk Management?

The protocol defines the rules for collateralization, liquidation, and margin requirements. These rules are enforced automatically by smart contracts, ensuring that risk parameters are consistently applied across all users. Non-custodial protocols aim to minimize counterparty risk by eliminating the need for a trusted intermediary.


---

## [Zero-Knowledge Derivatives](https://term.greeks.live/term/zero-knowledge-derivatives/)

## [Portfolio Construction Principles](https://term.greeks.live/term/portfolio-construction-principles/)

## [Asset Allocation Models](https://term.greeks.live/term/asset-allocation-models/)

---

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---

**Original URL:** https://term.greeks.live/area/non-custodial-risk-management/resource/2/