Operational Risk
We introduce this module as an operational monitoring layer built to manage idle positions.
This risk view is intentionally simple and action-oriented.
Purpose
- What is the status of the portfolio?
- Do I have inactive positions?
- What is the opportunity cost?
- What action should I take NOW?
Operational Risk Monitoring
Scope of the module
As each position works differently (asset, range, volatility), this module aims to create an easy call-to-action (or not).
Thinking as an opportunity cost on out-of-range (OOR) position, restores control on what action perform to reduce non profitable but risky positions.
Risk Logic: The “OOR Timer”
When talking about fast decision-making, the rules need to be forward: time-based OOR.
-> How much earnings am I losing while OOR?
| OOR duration | Status | Suggested action |
|---|---|---|
| < 2 Days | Acceptable | None (noise or volatility spike). |
| 3 to 5 Days | To monitor | Opportunity cost increases. market structure change? |
| 5 Days+ | Critical | consider adapting strategy : rebalance or exit. |
Limitations
This module deliberately excludes some risks such as:
- Impermanent Loss: Inherent to AMM structure. We especially focus on LP strategies here, so no need to compare with HODL.
- Directional drawdowns: Caused by inventory exposure, it is intentionally outside the current scope.
Hedging strategies for inventory drift are identified as a potential future extension of this risk framework.
Complementary Risk Monitoring
In addition to LP operational risk, liquidation risk on lending positions is monitored through a dedicated LTV overview and automated alerts.