> ## Documentation Index
> Fetch the complete documentation index at: https://docs-staging.centuari.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Risk Parameters

> Setting and managing vault risk parameters

## Overview

Risk parameters define the boundaries within which you can operate. They protect depositors and ensure vault behavior matches expectations.

## Core Parameters

### Position Concentration

Maximum allocation to any single position:

| Setting             | Conservative | Moderate | Aggressive |
| ------------------- | ------------ | -------- | ---------- |
| Max single position | 10-15%       | 15-20%   | 20-25%     |

**Why it matters**: Prevents catastrophic loss from single position failure.

### Protocol Concentration

Maximum allocation to any single protocol:

| Setting               | Conservative | Moderate | Aggressive |
| --------------------- | ------------ | -------- | ---------- |
| Max protocol exposure | 50-60%       | 60-80%   | 80-100%    |

**Why it matters**: Limits smart contract risk to any one protocol.

### Maturity Limits

| Parameter    | Conservative | Moderate | Aggressive |
| ------------ | ------------ | -------- | ---------- |
| Min maturity | 30 days      | 14 days  | 7 days     |
| Max maturity | 90 days      | 180 days | 365 days   |

**Why it matters**: Shorter max = more liquidity, less rate exposure.

### Cash Buffer

Minimum cash/liquid assets for withdrawals:

| Setting         | Conservative | Moderate | Aggressive |
| --------------- | ------------ | -------- | ---------- |
| Min cash buffer | 15-20%       | 10-15%   | 5-10%      |

**Why it matters**: Ensures withdrawal availability.

## Setting Parameters

### At Creation

Parameters set at vault creation are binding:

```
Immutable at creation:
├── Allowed protocols
├── Base asset
├── Strategy type
└── Max concentration limits (can only tighten)
```

### Post-Creation Changes

| Change Type     | Process          | Timeline                  |
| --------------- | ---------------- | ------------------------- |
| Tighten limits  | Curator decision | Immediate                 |
| Loosen limits   | Governance vote  | 14-day vote + 7-day delay |
| Add protocol    | Governance vote  | 14-day vote + 7-day delay |
| Remove protocol | Curator decision | Immediate                 |

## Enforcement

### Hard Limits

Cannot be exceeded under any circumstances:

* Max single position
* Max protocol concentration
* Allowed protocol list

Attempting to exceed triggers transaction revert.

### Soft Limits

Can be temporarily exceeded, requires action:

* Cash buffer (can drop due to withdrawals)
* Target allocations (drift allowed)

Alert triggers when soft limits breached.

## Monitoring

### Dashboard Alerts

| Alert                 | Trigger         | Priority |
| --------------------- | --------------- | -------- |
| Concentration warning | >80% of limit   | Medium   |
| Concentration breach  | At limit        | High     |
| Cash buffer low       | \<50% of target | Medium   |
| Cash buffer critical  | \<25% of target | High     |

### Reports

Weekly risk report includes:

* Current allocation vs limits
* Concentration metrics
* Liquidity status
* Upcoming maturities

## Risk Scenarios

### Scenario: Large Withdrawal

```
Vault Status:
├── AUM: $1,000,000
├── Cash: $100,000 (10%)
├── Min buffer: 10%

Withdrawal request: $150,000

Problem: Would push cash to -5% (below buffer)

Options:
1. Partial fill: Process $50,000 now
2. Queue: Add $100,000 to queue
3. Liquidate: Sell positions to meet request
```

### Scenario: Position Limit Approach

```
Vault Status:
├── Position A: 18% of vault
├── Max position: 20%

Position A appreciates 15%:
├── New weight: 20.7%
├── Status: BREACH

Required action: Reduce Position A to ≤20%
```

## Best Practices

<CardGroup cols={2}>
  <Card title="Conservative Start" icon="shield">
    Begin with tighter limits; loosen as you gain experience
  </Card>

  <Card title="Buffer Room" icon="expand">
    Set limits 10-20% below what you think you need
  </Card>

  <Card title="Match Strategy" icon="bullseye">
    Parameters should reflect stated strategy
  </Card>

  <Card title="Regular Review" icon="calendar">
    Weekly check of all risk metrics
  </Card>
</CardGroup>

## FAQs

<AccordionGroup>
  <Accordion title="Can I exceed limits temporarily?">
    Hard limits: No. Soft limits: Yes, with required follow-up action.
  </Accordion>

  <Accordion title="What if market conditions change?">
    You can tighten limits immediately. Loosening requires governance.
  </Accordion>

  <Accordion title="How do limits affect performance?">
    Tighter limits = less flexibility but more safety. Balance based on your strategy.
  </Accordion>
</AccordionGroup>