> For the complete documentation index, see [llms.txt](https://docs.kyoko.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.kyoko.finance/how-it-works/peer-to-pool-nft-lending-platform/risk-models-health-factor-or-time-based/risk-framework.md).

# Risk Framework

## Risk Framework

With billions of locked assets, Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) have boomed in recent years.

The industry has been forming various standards to manage the emerging risks related to the hyper-connected ecosystem. Kyoko will be audited by 3-4 well-known audit firms as detailed in[ Security & Audits](https://docs.hasai.xyz/risk/security-and-audits).

The following documentation analyses the fundamental risks of the protocol and describes the processes in place to mitigate them. A Kyoko Market Risk Assessment has been produced by the quantitative modeling team of Kyoko. The Safety Module have been stress tested via agent-based simulation. The simulations show that the model can remain solvent under extreme market conditions, exhibiting proper risk management. As a result, Kyoko provided some parameter suggestions to reduce insolvency risk further.

If you have any questions, join us on Discord; our team and community members look forward to helping you understand risk management procedures.

### Asset Risk

Asset Risk goes over the implications of adding a new asset. Kyoko's methodology quantifies the risks of each asset assessing its fit as well as the appropriate risk parameters.

### Liquidity Risk

Liquidity Risk presents the liquidity risk mitigation strategies in place validating them by an analysis of the historical utilization of the protocol.

<br>