Protocol Risks
It is important to fully understand the world of DeFi before deciding to enter it. Here is a brief overview of the main inherent risks of the OrcaDAO realm of DeFi that are important to keep in mind, as well as some links where you can learn more.

Liquidation Risk

This is both the primary risk, and most important to understand. In volatile scenarios, liquidation of a vault is what may occur if/when the collateral within a vault falls below the minimum collateral ratio. This phenomenon is discussed in detail here.
In practice, this will occur on OrcaDAO when the Loan-to-Value ratio (LTV) falls above each asset's maximum (here for reference) as shown here:
As soon as the liquidation option becomes available, any other community user with available funds that is monitoring active vaults has incentive to execute the liquidation. The user pays that vault's debt off using their own AVAI, and receives the debt collateral as reward. Please see here for an example
It therefore becomes a matter of personal risk management as to how close to that ratio you want to manage your vault. The more you borrow the better value of leverage you are receiving, but the closer you become to the liquidation range.

What is a safe/healthy ratio of LTV?

You will want to allow for some buffer room in case your collateral asset drops a bit in price over the term of your loan, and not take the very maximum allowable LTV. Every user’s risk tolerance will be different, and it will require some math for you to decide what you are comfortable with.
For example, if a -15% flash dump were to occur to AVAX and most of the rest of the market in a day, you would likely not have the time to react before another user liquidated your loan, and you would lose a partial amount of the collateral deposited.
To avoid this, an example like the one above is a ‘healthier’ level of 50% out of a maximum of an example 66.67% LTV for AVAX. This allows AVAX to drop 25% (.5/.6667) before you run the risk of liquidation.
To illustrate: If AVAX is $100, and you take $50 in AVAI out as a loan, for ($50/$100 or 50%), AVAX would need to fall to $75 before you broke the 66.67% threshold ($50/$75).
Of course, some users will call the above example too risky, and others not risky enough, which is where the power is in your hand to decide.

Mass buys/sells on third party exchanges:

This is when large amounts of AVAI are bought or sold on an exchange that clear order books beyond the desired stable range. Arbitrage opportunities are the best self-regulating measure that is taken, and run by the community. There are other projects on Avalanche that specialize in these opportunities as well.
We've detailed safeguards for these scenarios to further describe.