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title: Governance Risk Framework

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title: Governance Risk Framework
order: 3
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description: "This section describes the risk management in Maker and the role of Maker token holders in managing it."
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# Governance Risk Framework

This section describes the risk management in Maker and the role of Maker token holders in managing it.

The goal of governance is to establish the effective processes for protecting the integrity and stability of the Maker system.

We aim to achieve that goal by building a decentralized, open, scientific risk management community.

## Risk in Maker

Risk factors associated with the Maker Protocol include, but are not limited to:

- Volatility: The higher the volatility of the collateral value, the less likely we are to recover the full loan in the event of default.

- Qualitaty: The less stable the fundamentals of the organization, the less confident holders will be, and the more volatile the price will become.

- Liquidity: The less liquidity available in the market, the more likely the price impact will work against realizable value.

- Exposure: The higher the aggregate relative exposure to total supply, the more risk in trying to realize its value.

- Correlation: The higher the correlation, the less the diversification benefit.

- Price Feed: What makes a price feed sufficient?
