# Systems Risk Mitigation ⎊ Area ⎊ Resource 13

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## What is the Risk of Systems Risk Mitigation?

Systems risk mitigation involves identifying, assessing, and reducing potential failures within a decentralized financial system. This includes addressing vulnerabilities in smart contracts, managing oracle failures, and ensuring sufficient liquidity during periods of high volatility. The goal is to prevent cascading failures that could destabilize the entire ecosystem.

## What is the Control of Systems Risk Mitigation?

Mitigation strategies employ various controls, such as circuit breakers, automated liquidation mechanisms, and robust collateral management systems. These controls are designed to limit losses and maintain solvency during extreme market events. Effective risk management requires continuous monitoring and adaptation to evolving market conditions.

## What is the Resilience of Systems Risk Mitigation?

The ultimate objective of systems risk mitigation is to build resilience into the financial infrastructure. By implementing redundant systems and robust governance mechanisms, protocols can withstand unexpected shocks. This ensures the continuous operation of derivatives markets and protects user funds from systemic collapse.


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## [Value at Risk (VaR)](https://term.greeks.live/definition/value-at-risk-var/)

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**Original URL:** https://term.greeks.live/area/systems-risk-mitigation/resource/13/