# RiskModule Risk Module is an abstract contract that needs to be implemented with specific policies for the main responsibilities of the contract: pricing and resolution. The contract also stores several parameters that are used for the creation and validation of the policies. ## **Roles** The specific roles and functions of the contract are as follows:
RoleGlobal*DescriptionMethods Accessible
LEVEL1_ROLEtrueHigh impact changes like upgrades or other critical operations.
LEVEL2_ROLEtrueMid-impact changes like changing some parameters.
LEVEL3_ROLEtrueLow-impact changes like changing some parameters up to given percentage (tweaks).
RM_PROVIDERfalseManages the risk module.
  • setWallet: Sets the risk module wallet.
( \* ) Global means that the role can be delegated to a user at the protocol level (for all components) or only for a specific component. Non-global roles can only be granted for a specific component. ## Parameters These parameters are managed and adjusted by the protocol governance. Some come from business decisions and others are quantitative analysis decisions. | Field | Type | Description | | ------------------ | ---------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | moc | uint256 (wad) | Margin of Conservatism. A factor used to scale the expected losses calculated as `payout * lossProb` | | jrCollRatio | uint256 (wad) | The collateralization ratio up to the junior eToken (see [Solvency Breakdown](https://docs.ensuro.co/ensuro-docs/policy#solvency-breakdown)) | | collRatio | uint256 (wad) | The overall collateralization ratio (see [Solvency Breakdown](https://docs.ensuro.co/ensuro-docs/policy#solvency-breakdown)) | | ensuroPpFee | uint256 (wad) | Percentage applied to the pure premium used to compute the [Ensuro Commision](https://docs.ensuro.co/ensuro-docs/policy#ensuro-commission). | | ensuroCocFee | uint256 (wad) | Percentage applied to the cost of capital used to compute the [Ensuro Commision](https://docs.ensuro.co/ensuro-docs/policy#ensuro-commission). | | jrRoc | uint256 (wad) | Annualized return expected by Junior eToken liquidity providers for the capital exposed to these risks. See [more details](https://docs.ensuro.co/ensuro-docs/policy#junior-and-senior-cost-of-capital). | | srRoc | uint256 (wad) | Annualized return expected by Senior eToken liquidity providers for the capital exposed to these risks. See [more details](https://docs.ensuro.co/ensuro-docs/policy#junior-and-senior-cost-of-capital). | | maxPayoutPerPolicy | uint256 (amount) | The maximum payout that's allowed as payout for each individual policy of this risk module. | | exposureLimit | uint256 (amount) | The limit on the cumulative exposure of all the active policies of this module. | | maxDuration | uint256(hours) | The maximum duration of the policies (in hours). | ### Packed parameters To save gas, the parameters are stored in a packed struct that fits in 256bits (a *word* in the EVM). This is not visible externally, but put's limits on the precision of the parameters. The *wad* ones, have 4 decimals as precision, so 1.12345 will be truncated to 1.1234. *maxPayoutPerPolicy* has a precision of two decimals, and *exposureLimit* 0 decimals. ## Internal methods ### \_newPolicy ```solidity function _newPolicy(uint256 payout, uint256 premium, uint256 lossProb, uint40 expiration, address payer, address onBehalfOf, uint96 internalId) internal returns (struct Policy.PolicyData) ``` Called from child contracts to create policies (after they validated the pricing) | Name | Type | Description | | ---------- | ------- | --------------------------------------------------------------------------------- | | payout | uint256 | The exposure (maximum payout) of the policy | | premium | uint256 | The premium that will be paid by the policyHolder | | lossProb | uint256 | The probability of having to pay the maximum payout (wad) | | expiration | uint40 | The expiration of the policy (timestamp) | | payer | address | The account that pays for the premium | | onBehalfOf | address | The policy holder | | internalId | uint96 | An id that's unique within this module and it will be used to identify the policy | ## External Methods ### releaseExposure ```solidity function releaseExposure(uint256 payout) external ``` Called when a policy expires or is resolved to update the exposure. Requirements: * Must be called by `policyPool()` | Name | Type | Description | | ------ | ------- | ------------------------------------------- | | payout | uint256 | The exposure (maximum payout) of the policy | ### Setting parameters Usually, **LEVEL1\_ROLE, LEVEL2\_ROLE** or **LEVEL3\_ROLE** is requested for performing operations that change numerical parameters of the components. Both global and component role are accepted. If the user has **LEVEL3\_ROLE** the changes might be restricted to small tweaks.