What type of Risk Management Strategies do we adopt?

At InsurAce, we strongly believe in demonstrating transparency about the way we operate, and we figured that it will be in the best interests to share with our community on how we mitigate concentration risk through the strategies outlined below: 

Risk Assessment Methodology 

Before we decide to list any protocols, we require them to fill up a Risk Assessment Form on their end. 

To determine the eligibility of a protocol for listing on our dAPP, we require the following: 

  • Minimum of $10M TVL 
  • Mainnet live for at least a month 
  • One quality audit 

After a protocol is deemed eligible, we will proceed with our Risk Assessment process where we will evaluate based on the criteria over here 

The outcome of the Risk Assessment will determine if the protocol will be listed on our dApp

Solvency Capital Requirement 

InsurAce strictly adheres to the Solvency Capital Requirement (SCR), a standard adopted by insurance & reinsurance undertakings in EU.  In short, SCR is used to ensure sufficient funds so that insurance company can meet its obligations to policyholders over the next 12 months with a 99.5% probability.  

At InsurAce, we use SCR as our capital management standard to calculate the minimum required amount of funds set aside to pay all the potential claims considering all quantifiable risks.  

We have done up a detailed explanation over here  

Limiting Capacity & adjusting prices 

Following any hack, bug, exploit, or other security breach in the crypto space, InsurAce reevaluates its products and covers. We update our policies accordingly, but most importantly, for mitigating future risks, we manage the two key factors when interacting with our customers.  

We control the capacity on any one chain that we support, as well as setting capacities for individual protocols and risk types. Following the recent UST de-peg event, we have realised that this capacity was set too high and have now adjusted it to limit any future exposure for stakers.  

To also help with the risk, we can increase or decrease prices of these policies. This allows us to balance the risk/reward when listing any protocol or product on our app.  

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