# Risk Score to Allocation

Risk Scores and APY are two quantitative statistics which can be used to determine the "willingness" of any given user to be in a certain Strategy, for example: A Strategy with a (relatively) low Risk Score combined with a high APY is significantly more interesting than a Strategy with the same parameters in inverse.

Translating these two statistics into a finalized allocation is done by the "Allocation Provider", a simple piece of arithmetic.

The Allocation Provider takes as inputs the Risk Scores attached to Strategies and their respective APYs to calculate the exposure to each Strategy in % of total assets managed. The shift between lower risk strategies and higher risk strategies is decided upon by taking the Risk Appetite value of a given Spool Smart Vault. The correlation between Risk Appetite and asset allocation is visualized here.

Last modified 1yr ago