Recorded 28 July 2023. Here at CF Benchmarks, we don’t downplay the fact that crypto is potentially one of the riskiest asset classes around. But thinking more constructively, how can those risks be managed? In fact, because digital assets are so dissimilar to traditional assets in terms of technological complexity, their mode of economic participation and more, how do we even determine and measure such risks? These are the kinds of questions our guest on the latest episode of CFB Talks Digital Assets, Kyle Downey, has been grappling with for years. Kyle is co-founder and CEO of crypto risk analytics firm Cloudwall, and he quickly realised that although risk management is fundamental to any market activity, Cloudwall finds itself among the relatively few companies researching and constructing cogent models to credibly address that need. We think the stimulating conversation between Kyle, Gabe Selby, CFA and Ken Odeluga will be as educational for you as it was for us. Some highlights:

• Why the ‘four quadrants of risk’ - market, liquidity, operational and credit - require radically different ‘weightings’ for digital assets than for traditional assets;
• How Cloudwall surmounts crypto-specific data challenges like the relatively short historical horizon and data quality;
• Key features of the Serenity Portfolio Risk System, including the first commercial grade factor risk model for cryptoassets;
• Potential integration of our CF Digital Asset Classification Structure (CF DACS), the first standardised universe of eligible cryptoassets, into Cloudwall models, to enable accurate attribution of digital asset category and sub-category risks;
• Looking to the future, how Cloudwall is modelling the uniquely discontinuous systemic risks of DeFi - “deeper down the stack” of a DApp, or the ledger of a smart contract.