what is haircut for risk 
a haircut in finance is directly tied to risk a lender does not want to issue a loan for the true value of collateral because if the value of the assets decrease the lender will be at risk to not recover the net value of their issued debt to mitigate risk a lender will implement a haircut on the value of the collateral by having the true value of the collateral be higher than what the loan is actually issued for the lender can build in risk mitigation to ensure full recoverability 