Closed-Loop Risk Management is a systemic approach that continuously monitors, assesses, and mitigates risks by integrating feedback from monitoring activities to refine and improve risk controls. Its objective is to establish an adaptive and self-correcting risk posture within a dynamic operational context, ensuring resilience against evolving threats.
Mechanism
This system integrates risk identification, measurement, and control processes with real-time performance monitoring and automated adjustment mechanisms. Data on risk events, control effectiveness, and market conditions cycles back into the assessment phase, informing subsequent policy modifications and system recalibrations.
Methodology
Within crypto investing and institutional trading, this framework involves automated surveillance of market volatility, counterparty credit risk, and operational security. It uses algorithmic triggers to adjust trading parameters or capital allocation based on predefined risk thresholds, thereby maintaining portfolio stability and regulatory compliance against the unique risks of digital asset markets.
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