> For the complete documentation index, see [llms.txt](https://advisorhub.syntheticfi.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://advisorhub.syntheticfi.com/quick-start/understanding-the-risks.md). # Understanding the Risks **Module 3 of 4 ยท 3 minutes** {% hint style="info" %} ## The risks are well understood and managed for you Every portfolio-backed loan carries some risk. SyntheticFi's are very similar to what your clients already use, and SyntheticFi monitors the portfolio the whole time. {% endhint %} ### The three main risks **Margin call risk.** If the market falls far enough, the client may need to add cash or securities. ***How it's managed:*** The client controls the cushion by how much they borrow, borrow less for a bigger cushion. SyntheticFi monitors the portfolio the whole time. **Interest rate risk.** A locked-in fixed rate won't move if market rates move later. ***How it's managed:*** Clients who want flexibility can choose the floating option, which moves with the market. **Execution risk.** In a rare, truly unscheduled market freeze, a new loan can't be opened and an existing loan can't be rolled during that window. ***How it's managed:*** These events are rare, and existing loans that aren't being rolled are unaffected. If a roll can't execute during a freeze, the loan simply pays the custodian's margin interest for those few days until the market reopens.\* ### What's the worst case? Clients sometimes ask. The honest answer: the main risk is a margin call if the market falls sharply. Execution risk is minor, at worst, the client pays a slightly higher rate for a few days during a rare market freeze. ### Talk about it with confidence Bringing risk up yourself, calmly, builds trust with clients. It also disarms the "too good to be true" reaction before it starts. ### **What to say:** > "Any loan backed by investments carries some risk if the market falls far enough. SyntheticFi monitors the portfolio the whole time, and we control the cushion by how much you borrow." *** When you're ready, hit **Next** below. *** [\* Important Disclosures](/disclosures.md) --- # 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://advisorhub.syntheticfi.com/quick-start/understanding-the-risks.md?ask=&goal= ``` `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.