> For the complete documentation index, see [llms.txt](https://rwapact.gitbook.io/whitepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://rwapact.gitbook.io/whitepaper/pact-execution/risk-evaluation.md).

# Risk Evaluation

## Risk Evaluation

The first substantive gate examines the conditions around the proposed trade. KRO, the **Risk Oracle**, evaluates RWA-specific risk before the Pact considers authorization.

KRO evaluates current trade risk. It does not decide whether that risk is acceptable for a particular owner or policy. That decision belongs to KPV later in the flow.

### Risk context for RWAs

KRO evaluates the conditions that can affect a tokenized real-world asset trade:

* Oracle staleness and price deviation
* Liquidity depth and slippage
* Market hours and compliance freeze
* Concentration and volatility

These inputs give the Pact a risk view of the proposed trade at evaluation time. They do not guarantee accurate market data or predict an execution outcome.

### Risk score and tiers

KRO produces a risk score from 0 to 100.

| Score range | Tier     | Meaning                      |
| ----------- | -------- | ---------------------------- |
| 0 to 20     | Safe     | Lower observed risk          |
| 21 to 50    | Caution  | Conditions require attention |
| 51 to 80    | Risky    | Elevated risk conditions     |
| 81 to 100   | Critical | Critical risk conditions     |

The score becomes an input to the Pact. KPV compares it with the configured policy threshold. A score may be elevated without automatically rejecting a trade if it remains within that threshold. Conversely, a lower score can still fail another Pact condition.

### Example: stale pricing and shallow liquidity

An Agent requests a trade in a tokenized stock. The available oracle data is stale and the market has shallow liquidity. KRO identifies both conditions and produces an elevated risk score.

The Pact does not treat this assessment as authorization or rejection by itself. The trade may fail when KPV compares the score with the policy-defined threshold. It can also fail a policy requirement for fresh oracle data or minimum liquidity.

Risk evaluation supplies the current context. [Session Validation](/whitepaper/pact-execution/session-validation.md) then confirms whether the Agent may act within the submitted session.

***


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## 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, and the optional `goal` query parameter:

```
GET https://rwapact.gitbook.io/whitepaper/pact-execution/risk-evaluation.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

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.