PIPO maintains a comprehensive risk management framework covering market risk, operational risk, smart contract risk, and regulatory risk. This framework ensures platform stability while enabling innovation.
┌─────────────────────────────────────────────────────────────────┐
├─────────────────────────────────────────────────────────────────┤
│ ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │
│ │ MARKET │ │ OPERATIONAL │ │ SMART │ │
│ │ RISK │ │ RISK │ │ CONTRACT │ │
│ └──────┬──────┘ └──────┬──────┘ └──────┬──────┘ │
│ ┌────┴────┐ ┌────┴────┐ ┌────┴────┐ │
│ │• Oracle │ │• Custody│ │• Code │ │
│ │• Liquid │ │• Key Mgmt│ │ bugs │ │
│ │• Basis │ │• Process │ │• Oracle │ │
│ │• Conc. │ │• Team │ │ manip. │ │
│ └─────────┘ └─────────┘ └─────────┘ │
│ ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │
│ │ REGULATORY │ │COUNTERPARTY │ │ SYSTEMIC │ │
│ │ RISK │ │ RISK │ │ RISK │ │
│ └──────┬──────┘ └──────┬──────┘ └──────┬──────┘ │
│ ┌────┴────┐ ┌────┴────┐ ┌────┴────┐ │
│ │• License│ │• SPV │ │• Market │ │
│ │• Enforce│ │• Custod.│ │ crash │ │
│ │• Tax │ │• Writers│ │• Chain │ │
│ │• Sanct. │ │• Company│ │ issues │ │
│ └─────────┘ └─────────┘ └─────────┘ │
└─────────────────────────────────────────────────────────────────┘
| Risk | Likelihood | Impact | Mitigation | Residual |
|---|
| Oracle manipulation | Low | High | Multi-source, committee | Medium |
| AMM liquidity crisis | Medium | Medium | LP incentives, reserves | Low |
| Smart contract exploit | Low | Critical | Audits, bug bounty | Medium |
| SPV share fraud | Very Low | Critical | Due diligence, custody | Low |
| Regulatory action | Medium | High | Offshore structure, compliance | Medium |
| Underlying company failure | Medium | Medium | Diversification, puts | Low |
| USDC de-peg | Low | Medium | Monitor, pause mechanism | Low |
| Key person loss | Low | Medium | Succession planning | Low |
Risk: Oracle reports incorrect price (manipulation or error)
Impact: Incorrect settlement, unfair exercise outcomes
├── Multi-source aggregation (3+ sources)
├── Deviation checks vs. historical
├── Committee oversight (2/3 required)
├── Time-delayed updates (cooldown)
├── User dispute mechanism
├── Real-time deviation alerts
├── Source reliability scoring
Liquidity Risk Mitigation:
Risk: Insufficient AMM liquidity for large trades
Impact: High slippage, poor user experience
├── Platform LP seeding (initial)
├── LP incentive program (points, rewards)
├── Dynamic fee adjustment
├── Position limits (large orders)
└── OTC desk for VIP trades
├── TVL tracking per pool
Risk: AMM price diverges significantly from oracle/fair value
Impact: Arbitrage opportunities, settlement disputes
├── Oracle anchor (deviation limits)
├── Arbitrageur participation
├── Circuit breakers (>30% deviation)
└── Dynamic fees during volatility
├── Continuous basis tracking
├── Arbitrage opportunity alerts
└── Fee adjustment triggers
Risk: Loss or theft of SPV-held shares
Impact: Inability to back call warrants, settlement failure
├── Qualified custodian (regulated)
├── Insurance (E&O, fidelity)
├── Multi-sig for transfers
├── Quarterly confirmations
└── Insurance coverage review
Risk: Loss or compromise of critical private keys
Impact: Fund loss, contract manipulation
├── Multi-sig wallets (3/5)
├── Hardware wallets (Ledger/Trezor)
├── Geographic distribution
├── Recovery procedures documented
├── Regular key ceremony drills
├── Treasury keys: 4/7 multi-sig
├── Contract admin: 3/5 multi-sig
├── Oracle committee: 2/3 multi-sig
└── Hot wallet (operations): Limited funds
├── Internal audit (multiple reviewers)
├── External audit (2+ firms)
├── Formal verification (critical functions)
├── Bug bounty program ($100K+ pool)
├── Monitoring (anomaly detection)
├── Upgrade capability (timelock)
├── Emergency pause function
└── Incident response plan
├── Nexus Mutual coverage
└── Reserve fund (5% of TVL)
Oracle Manipulation Defense:
├── Compromised data sources
├── Multi-source aggregation
├── Time-weighted averaging
├── Committee signatures (2/3)
└── Position limits during events
Regulatory Risk Mitigation:
├── Operating entity: Singapore/BVI
├── SPV holding: Cayman Islands
├── No US operations (initially)
└── Legal opinions obtained
└── Tax reporting preparation
├── Regulatory news tracking
├── Legal counsel updates
├── Peer platform actions
┌─────────────────────────────────────────────────────────────────┐
│ THREE LINES OF DEFENSE │
├─────────────────────────────────────────────────────────────────┤
│ └── Responsibility: Day-to-day risk management │
│ 2ND LINE: Risk & Compliance │
│ ├── Compliance officer │
│ └── Responsibility: Oversight, policy, monitoring │
│ 3RD LINE: Independent Assurance │
│ ├── External auditors │
│ ├── Smart contract auditors │
│ ├── Board audit committee │
│ └── Responsibility: Independent verification │
└─────────────────────────────────────────────────────────────────┘
├── External advisor (optional)
├── Weekly: Operational risk review
├── Monthly: Comprehensive risk assessment
├── Quarterly: Strategy and policy review
└── Ad-hoc: Incident response
├── Risk appetite definition
└── Regulatory coordination
┌─────────────────────────────────────────────────────────────────┐
├─────────────────────────────────────────────────────────────────┤
│ Overall Risk Status: 🟢 LOW │
│ ├── Oracle deviation: 2.3% (limit: 10%) 🟢 │
│ ├── AMM basis: 1.8% (limit: 15%) 🟢 │
│ ├── Liquidity score: 85/100 🟢 │
│ └── Concentration: 45% SpaceX (limit: 60%) 🟡 │
│ ├── System uptime: 99.98% 🟢 │
│ ├── Settlement success: 100% 🟢 │
│ ├── Key compromise: None detected 🟢 │
│ └── Staff incidents: 0 🟢 │
│ ├── Last audit: 45 days ago 🟢 │
│ ├── Open vulnerabilities: 0 critical 🟢 │
│ ├── Bug bounty submissions: 3 (none critical) 🟢 │
│ └── TVL at risk: $0 🟢 │
│ ├── Enforcement actions: None 🟢 │
│ ├── Regulatory inquiries: None 🟢 │
│ └── Compliance exceptions: 0 🟢 │
│ Alerts Today: 0 Critical | 2 Warning | 5 Info │
│ [View Full Report] [Configure Alerts] [Historical Trends] │
└─────────────────────────────────────────────────────────────────┘
| Level | Definition | Response Time | Example |
|---|
| P0 | Critical - funds at risk | 15 min | Smart contract exploit |
| P1 | High - service impaired | 1 hour | Oracle failure |
| P2 | Medium - degraded | 4 hours | High slippage |
| P3 | Low - minor issue | 24 hours | UI bug |
Detection → Triage → Contain → Investigate → Resolve → Review
├── Immediate: Pause contracts if needed
├── 15 min: War room assembled
├── 1 hour: Initial assessment public
├── 4 hours: Resolution or workaround
├── 24 hours: Full post-mortem
└── 7 days: Remediation complete