# Risk Assessment Framework **Why Risk Assessment is Needed** * **Comprehensive Evaluation**: Assesses multiple risk factors including borrower profiles, asset volatility, and protocol risk. * **Informed Integration**: Helps builders decide which protocols to integrate with based on liquidity, rewards, and risk levels appropriate for specific use cases. * **Portfolio Optimization**: Provides valuable insights for portfolio managers and asset builders to optimize their strategies. **Parameters of the Risk Assessment Framework** * **Protocol Risk**: Assesses the overall risk of different DeFi protocols based on their historical performance, security, and reliability. * **Asset Volatility**: Analyzes the price volatility of assets to assess potential risks. * **Borrower Profiles**: Evaluate the creditworthiness and risk associated with individual borrowers. * **Ecosystem Analysis**: Considers the broader DeFi ecosystem, including market trends and external factors that may impact risk levels. Read more about our methodology [here](https://mirror.xyz/lucidityfinance.eth/sZjaPZ42xE5WigH_cPlGZFf0h3PgtPYLltMaK8NLsE8). --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.lucidity.finance/protocol/discovery-engine/risk-assessment-framework.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.