# How risk is handled (high-level) Risk in DeFi differs fundamentally from traditional finance. Traditional markets benefit from decades of historical data, standardized reporting, regulatory oversight, and established financial models. DeFi operates in a younger, more dynamic environment: * Protocols are often only a few years old. * Governance can alter mechanics in real time. * Smart contracts directly control capital. * Liquidity can migrate instantly. Shift addresses this through a proprietary risk framework built specifically for decentralized markets. At a high level, it includes: * Breaking every strategy into fundamental components. * Evaluating assets, protocols, and networks independently. * Assigning structured risk ratings. * Diversifying across unrelated exposures. * Monitoring live positions continuously. * Executing automated exits when predefined conditions occur. * Recalibrating portfolios as conditions evolve. The full methodology is detailed in the Risk framework section. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.shiftdefi.com/user-docs/start-here/how-risk-is-handled-high-level.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.