Client position protection is not the only aspect of risk management for brokers. Brokers are also responsible for the management of their capital and the liquidity of their firms, as well as how they manage their exposure to market stress. 

Having an internal risk control process will support a brokerage firm’s continued operations during times of extreme market volatility.

Well-prepared brokerage firms are able to rely on their contingency plans, backup systems, and adequate levels of liquidity to operate their trading platforms and execute client trades normally during times of extreme market volatility. Firms that do not invest in these necessary precautionary measures generally will limit or stop all operations entirely.

Risk management for brokerage firms protects both the brokerage firm and the clients, including even the most cautious trader if the firm is unable to perform its duties due to risk management failure. Properly managed risk at the firm level is crucial to the overall success and stability of a brokerage firm.