Envisioning Risk Management for Smart Contracts: A Conceptual Model

Abstract

This study proposes a smart contract risk management model built on the NIST Risk Management Framework (RMF) to help identify, assess, and manage the risks of smart contracts. While smart contracts are beloved as a means to automate and disintermediate business processes, their security vulnerabilities can be critical. The main issue discussed in this paper is the lack of a holistic approach to risk management smart contracts. The resulting framework consists of six steps: Risk identification, assessment, prioritization, mitigation, testing, and continuous monitoring (and was developed through reviewing existing literature on smart contract security and the NIST RMF). It is recommended that a case study be performed to prove the proposed model's effectiveness in managing the risks of smart contracts and minimizing financial losses and reputational harm. The paper presents a risk management framework for smart contracts to increase trust and adoption to enhance security while reducing financial losses and reputation damage. This has wider implications for the security of smart contracts and can be used as a starting point for future work. This study is expected to significantly contribute to smart contract security by introducing an organized way to address these contracts' risks using the NIST RMF.