> For the complete documentation index, see [llms.txt](https://qiro.gitbook.io/qiro-vaults/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://qiro.gitbook.io/qiro-vaults/legal-disclosure/risks.md).

# Risks

Qiro Vaults allocates to real private credit. This means real credit risk, not crypto-native smart contract risks dressed up as yield. Investors should understand both layers.

### Credit risk

Private credit can default. A borrower may fail to repay on time or at all. Qiro mitigates this through:

* **Institutional underwriting:** every deal deployed through a vault has been through Qiro's credit process: financial analysis, risk scoring, rating policy. We do not deploy to ununderwritten deals.
* **Secured position:** every facility is secured against identified collateral, typically the borrower's own receivables, with security cover of 1.0x to 1.5x.
* **Diversification:** multiple loans and/or funds can be active simultaneously within a vault, reducing single-borrower concentration.
* **Hard gates:** bright-line exclusions are applied before underwriting begins, covering operating history, licensing, geography, and credit type.

Defaults will happen over time in any credit portfolio. The underwriting process is designed to price and select risk appropriately, not eliminate it.

### Liquidity risk

This is not a liquid product. Your capital is deployed into illiquid instruments.

* **Redemptions are async.** You submit a request; it sits in a FIFO queue until the vault has sufficient idle cash to service it.
* **No guaranteed timeline.** Redemption speed depends on loan maturities, fund withdrawal queues, and the operator's capital recycling decisions.
* **Idle cash only pays redemptions.** If all capital is deployed and no strategies have matured, the redemption queue will wait.

Do not allocate capital you may need at short notice.

### Smart contract risk

The vault contracts have been audited (see [Security Audits](/qiro-vaults/technical-overview/security-audits.md)) and use standard, audited dependencies (OpenZeppelin, Solady). Known audit findings have been remediated.

Smart contract risk cannot be fully eliminated. Bugs or exploits in the vault contracts could result in loss of funds. The contracts are not upgradeable, so deployed code cannot be changed after you deposit.

### Regulatory risk

Private credit investing is regulated in most jurisdictions. Investors are responsible for ensuring their participation is compliant with applicable law. Qiro operates with KYC/KYB requirements and targets accredited/institutional investors only.