> For the complete documentation index, see [llms.txt](https://quantixfinance.gitbook.io/quantixfinance-docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://quantixfinance.gitbook.io/quantixfinance-docs/risk-management-and-compliance/portfolio-controls.md).

# Portfolio controls

A single well-underwritten loan can still concentrate a pool's risk if it is large enough, or if the whole book is exposed to the same thing. Portfolio controls exist to keep any one failure from determining the pool's outcome.

The primary controls are concentration limits and diversification. A cap on the largest single-borrower exposure prevents one default from dominating losses; limits on exposure to a sector, a strategy, or a correlated set of counterparties prevent the book from being one bet wearing several names. These limits are set by the delegate managing each pool and disclosed as part of that pool's parameters, consistent with how cost of capital and other pool-specific terms are handled throughout this document — a lender comparing two pools can see not just the headline yield but the concentration profile behind it. Coverage requirements set the collateral a secured loan must maintain, and the first-loss layer sizes the cushion beneath senior lenders for the pool as a whole.

These controls are pool-level and are part of what distinguishes one pool's risk profile from another's. A pool that lends to a handful of large, correlated trading desks is a different instrument from one spread across many independent borrowers, even at the same headline yield, and portfolio controls are where that difference is made explicit rather than left for a lender to discover after the fact.