# Risks and Mitigants

Key external risks in the architecture of Resolv are *counterparty credit risk,* *market risk, and liquidity risk*. Below is their brief description together with the features of the protocol aimed at managing these risks.

<table><thead><tr><th width="174.33333333333331">Risk Category</th><th width="211">Description</th><th>Risk Management</th></tr></thead><tbody><tr><td><em>Counterparty Credit Risk</em></td><td><p>Risk of loss due to insolvency of a trading venue.</p><p>Exposed assets are:</p><ul><li>Margin held with an exchange</li><li>Unrealized gains (<a href="../useful-definitions/perpetual-futures">see more</a>)</li></ul></td><td><ul><li>Margin for futures positions is held with third-party custodians outside of exchanges.</li><li>RLP will cover the amount of unrealized gains.</li><li>Exposure to trading venues to be diversified to mitigate single counterparty risk.</li></ul></td></tr><tr><td><em>Market Risk</em></td><td>Risk of loss due to negative funding rates</td><td><ul><li>Futures are allocated to highly liquid exchanges to reduce risk of spot-futures price mismatch, which affects funding rates.</li><li>RLP will cover losses from negative rates at all times.</li></ul></td></tr><tr><td><em>Liquidity Risk</em></td><td>Risks of significant liquidity withdrawals from the protocol affecting its stability.<br>For example, substantial withdrawals from RLP</td><td>Redemption of RLP is suspended if USR Collateralization Ratio (CR) is below 110%.</td></tr></tbody></table>