Definition ∞ Risk Cleansing refers to the process of identifying, mitigating, and eliminating vulnerabilities or undesirable exposures within a financial system or digital asset protocol. This systematic approach involves a thorough review of smart contracts, operational procedures, and underlying infrastructure to reduce the likelihood and impact of potential security breaches, financial exploits, or regulatory non-compliance. It aims to fortify the system against known and emerging threats, thereby enhancing its overall resilience and trustworthiness. Effective risk cleansing is a continuous effort in dynamic digital asset environments.
Context ∞ Following major security incidents or market dislocations, news often highlights the urgent need for risk cleansing across the digital asset industry. Regulatory bodies are increasingly pushing for more robust risk management frameworks within centralized and decentralized entities. The ongoing discussion centers on developing standardized auditing practices, bug bounty programs, and rapid response protocols to maintain system integrity.
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