Prudent risk management involves identifying, assessing, and controlling potential financial and operational risks in a cautious and sensible manner. It prioritizes the preservation of capital and avoidance of excessive speculation. This approach seeks to minimize adverse impacts while supporting strategic objectives. It is a foundational principle in responsible financial operations.
Context
For institutions involved with digital assets, prudent risk management is a constant regulatory and operational focus. Given crypto’s volatility and novel operational risks, firms must establish robust frameworks for evaluating and mitigating potential losses. News often covers regulatory calls for stronger risk controls in the digital asset sector.
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