A clear, structured framework helps clients understand that risks exist but are actively managed. We recommend leveraging model portfolio disclosures, fact sheets, and our risk scoring feature to help break risks into categories and pair each with the specific controls you and a strategy’s manager apply: * Market Risk: The value of assets can go up or down with broader crypto and macro conditions. Control: Portfolios are diversified across strategies, assets, and networks to reduce exposure to any single market event. * Protocol Risk: A protocol may fail economically (poor token incentives, governance failure, etc.). Control: L1 curates only established protocols with strong adoption, audited code, and long-term sustainability. * Smart Contract Risk: Code bugs or vulnerabilities could be exploited. Control: We select protocols with multiple third-party audits, bug bounties, and large amounts of assets secured (battle-tested contracts). We also offer smart contract cover which can insure a client’s assets in the event of a protocol exploit or hack. * Liquidity Risk: Difficulty exiting a position quickly without slippage. Control: Allocations are made in liquid markets and rebalancing tools aggregate liquidity across multiple venues for best execution. Rebalances also have slippage tolerance settings that ensure filled orders stay within the desired threshold. * Oracle Risk: Inaccurate or manipulated price feeds could affect DeFi positions. Control: Preference is given to protocols using decentralized, multi-source oracle providers (e.g., Chainlink) with robust fallback mechanisms that are not vulnerable to a single point of failure or attack. * Operational Risk: Errors in execution, self-custody, or workflows. Control: L1 provides full audit trails, permissioning, and non-custodial design so advisors and clients maintain control with transparent records. We also provide tools for advisors to be involved in the signing of transactions as a redundant or backup signer. When spinning a new smart contract wallet on L1, advisors and clients can pick more than one authorized signer, as well as the threshold that must be met for transactions to be executed. This allows an advisor’s wallet to be added as a backup, or even initial signer, of a client’s wallets. Providing clear and transparent disclosures on risk is essential in staying compliant and educating your clients. This positions you not as someone avoiding risk talk, but as a professional with a disciplined risk-management process.