# Risks Breakdown

The three common types of risks of DeFi include **financial risk**, **procedural risk**, and **technical risk**.&#x20;

1.**Financial risk** relates to potential rewards of investment opportunities and management of the opportunities. Financial risk is commonly attributed to an organization or the risk tolerance of an individual. Financial risks also depend on the objectives of an individual for the management of a successful investment portfolio.

2.**Technical risk** directly relates to hardware and software issues of DeFi products or services.&#x20;

3.**Procedural risk** relates to the user and the methods they employ for using DeFi products or services that can compromise security. Procedural risks are almost similar to technical risks, in association with end-users(i.e. USER ERROR).
