> For the complete documentation index, see [llms.txt](https://pait.gitbook.io/pait/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://pait.gitbook.io/pait/how-pait-works/risk-management-and-security.md).

# Risk Management & Security

PAiT is designed with multiple layers of risk management and security controls to protect user capital.

**Risk Management**

* Capital is deployed across a large number of audited liquidity pools and lending protocols (minimum 50 pools).
* Exposure is limited to a maximum of **2% per position**.
* Only protocols with sufficient liquidity and track record are used.
* The AI Operator continuously monitors positions, market conditions, and risk indicators 24/7.
* Human operators review alerts and execute rebalances when necessary through multi-signature approvals.

**Security & Custody**

* The majority of funds are held in **cold multisig wallets** with a 3-of-5 signature requirement and timelock.
* Only a small portion of funds is kept in hot wallets for operational needs.
* All major movements require multiple approvals and cannot be executed by a single person or automated system.
* The AI Operator prepares allocation decisions but has no ability to move funds directly.

These measures are designed to reduce risk, though they do not eliminate it entirely. Participation in on-chain strategies still involves smart contract, market, and operational risks.