# Risk Parameter Updates ⎊ Area ⎊ Resource 2

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## What is the Adjustment of Risk Parameter Updates?

Risk parameter updates refer to the process of modifying key variables within a DeFi protocol to manage exposure to market volatility and potential losses. These adjustments typically include changing collateralization ratios, liquidation thresholds, and interest rates. The goal is to maintain the protocol's solvency and stability in response to changing market conditions.

## What is the Governance of Risk Parameter Updates?

In decentralized protocols, risk parameter updates are often managed through a governance process where token holders vote on proposed changes. This ensures that adjustments are made transparently and reflect community consensus. The governance structure must balance the need for rapid response to market events with the requirement for thorough analysis and community input.

## What is the Risk of Risk Parameter Updates?

The need for risk parameter updates arises from the dynamic nature of cryptocurrency markets, where volatility can rapidly change the risk profile of assets. Failure to adjust parameters in a timely manner can lead to undercollateralization and bad debt. The process of updating parameters itself introduces execution risk, requiring careful implementation to avoid unintended consequences.


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## [Delta-Based Updates](https://term.greeks.live/term/delta-based-updates/)

## [Security Parameter](https://term.greeks.live/term/security-parameter/)

## [Real Time Greek Calculation](https://term.greeks.live/term/real-time-greek-calculation/)

## [Oracle Security Design](https://term.greeks.live/term/oracle-security-design/)

---

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**Original URL:** https://term.greeks.live/area/risk-parameter-updates/resource/2/