# Security & Risk Controls

## Risks

Interacting with DeFi inherently involves risk, which broadly falls into two categories:

**Smart Contract Risk:** The possibility of financial loss from coding errors or unintended consequences within the contracts that power DeFi protocols.

**Economic Risk:** The economic uncertainty related to liquidity, protocol mechanics, market movements, strategy effectiveness, and asset volatility.

Veda vaults take a very specific approach to mitigating the risks for its clients using best-practices in smart contract development and DeFi curation.


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