Definition ∞ Risk Management Failure describes an instance where an entity’s strategies and processes for identifying, assessing, and mitigating potential financial or operational threats prove inadequate. This can result in significant losses, system compromises, or reputational damage. Such failures highlight shortcomings in oversight and protective measures.
Context ∞ In the digital asset space, risk management failures are frequently reported in crypto news, often leading to substantial financial repercussions for investors and platforms. These incidents can involve security breaches, liquidity crises, or smart contract exploits. Effective risk management is crucial for the stability and trustworthiness of decentralized finance and broader crypto markets.
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