# Risk Management Strategies Defx employs several strategies to manage and mitigate these risks: * **Comprehensive Smart Contract Audits:** Periodic self as well as third-party audits to identify and rectify vulnerabilities. * **Regulatory Monitoring:** Defx periodically audits regulatory developments to ensure compliance with relevant laws in the territories our exchange is available to operate in. * **Liquidity Incentives:** Encouraging market makers to provide liquidity, thereby reducing the risk of significant price slippage. * **Reducing latency while hedging:** With a combination of colocating DLE with the validator as well as centralised exchanges, and monitoring latency associated with hedging, the risk of DLE's drawdown is minimised. --- # Agent Instructions: 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: ``` GET https://docs.defx.com/docs/risks/risk-management-strategies.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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.