> 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/security-and-risk-model/rwa-specific-risks.md).

# RWA-Specific Risks

Why RWAPACT evaluates tokenized real-world asset risks before an autonomous trade is authorized.

## RWA-Specific Risks

A transaction can be technically valid while the underlying RWA trade remains unsafe. Wallet authority and transaction validity do not capture every condition affecting a tokenized real-world asset.

RWAPACT evaluates RWA-specific risk before authorization. KRO combines defined risk considerations into a Risk Score from `0` to `100`, which the Pact evaluates against the policy-defined threshold.

### Risk context for tokenized assets

| Risk dimension    | Why it matters to an autonomous Agent                                                   |
| ----------------- | --------------------------------------------------------------------------------------- |
| Oracle staleness  | Outdated pricing can cause a decision based on stale market information.                |
| Price deviation   | A material difference between price references can distort the trade context.           |
| Liquidity depth   | A trade may appear executable but lack enough liquidity for its size.                   |
| Slippage          | The expected price can differ from the eventual execution price.                        |
| Market hours      | Tokenized assets can have constraints tied to their underlying market.                  |
| Compliance freeze | Issuer or compliance restrictions can temporarily make an asset unavailable.            |
| Concentration     | Repeated exposure can create portfolio-level risk, even for an acceptable single trade. |
| Volatility        | Rapid price movement can make a previously acceptable trade materially riskier.         |

These conditions give the Pact context beyond generic transaction security. They help identify when a proposed action should not proceed under the active policy.

### Risk Score tiers

| Score     | Tier     |
| --------- | -------- |
| 0 to 20   | Safe     |
| 21 to 50  | Caution  |
| 51 to 80  | Risky    |
| 81 to 100 | Critical |

The tier describes KRO's risk assessment. The final decision still requires the Risk Score to be below the configured policy threshold. It also requires a valid Session, an allowed asset and amount, and optimized gas conditions.

### Risk before execution

KRO contributes the risk result. It does not independently authorize a trade.

```
Trade Intent
  -> KRO evaluates RWA risk context
  -> Risk Score
  -> Pact checks policy threshold and remaining conditions
  -> Authorization or Rejection
```

Risk evaluation happens before the Trade Intent reaches the Execution Layer. This allows the Pact to reject a technically valid action when its RWA risk context is unacceptable.

***


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