How Does the Immutability of a Smart Contract Affect Risk Management?

Immutability means the contract code cannot be altered once deployed on the blockchain. This drastically reduces execution risk, as all parties are guaranteed that the terms will not be changed mid-agreement.

It also removes the risk of a counterparty reneging on the deal. However, it introduces smart contract risk, as any bugs or vulnerabilities in the initial code cannot be easily patched.