What Is a “Single Point of Failure” in an Operational Process?
A single point of failure (SPOF) is a part of a system or process where, if that part fails, the entire system or process stops working. In physical settlement, an SPOF could be a single server holding the private keys or a single individual authorized to approve the final transfer.
Eliminating SPOFs through redundancy and multi-signature processes is key to operational resilience.
Glossar
Operational Risk
Framework ⎊ Operational risk within cryptocurrency, options trading, and financial derivatives transcends traditional financial definitions, demanding a framework that explicitly incorporates technological, regulatory, and idiosyncratic elements.
Single Point of Failure
Concentration ⎊ In crypto derivatives, this risk materializes when excessive collateral or governance control resides with a small number of entities, such as a few large liquidity providers or key developers.