Definition ∞ Risk segregation is the practice of separating different types of risks or assets to limit the potential for contagion and reduce overall exposure. In financial contexts, this involves isolating liabilities or operational functions to prevent a failure in one area from impacting others. It is a fundamental principle of sound risk management.
Context ∞ In the digital asset industry, risk segregation is a critical concept for exchanges, custodians, and decentralized finance protocols to protect user funds and maintain operational stability. News often discusses regulatory requirements or best practices for segregating client assets from operational funds. Implementing effective risk segregation measures is vital for building trust and mitigating systemic risks in crypto markets.
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