Cash

When you have cash, you have physical possession of bills or coins that hold value. You don't need to identify yourself to anyone, even the government, to hold and use that cash. This can be called 'self-custody' - after all, you're the only person responsible for it in this scenario.

If $5 falls out of your pocket in the street, it's gone - there's no reimbursement. Similarly, if a thief steals your cash it is unlikely that you will get it back.

Practicing risk management in the world of cash generally involves protecting the physical assets held in self-custody, avoiding social manipulation, or handing over possession of the physical assets to a person, company, or other entity that is charged with protecting those assets.

Custodial services involving cash are very often regulated by the governments of the countries in which they reside. This means that custodial services are normally a safe alternative to physically holding your cash or other valuable non-crypto assets. This does not apply to blockchain custodial services, as detailed in the next section.

Self-Custody

In the case of self-custody, any action undertaken to protect those assets can be seen as a form of risk management. This includes things as minor as getting a new wallet when your old one is damaged, as well as things as major as keeping a currency reserve locked in a safe. In both cases steps are being taken to limit the risks of losing cash that you maintain physical possession of.

Social Manipulation

With social manipulation, this generally just means avoiding scams. Not donating to nigerian princes is an obvious example, but protecting against social manipulation of your finances also includes things like making sure paid-services aren't only telling you the things you want to hear.

Custodial Services

Handing over possession of your cash assets involves the usage of 'custodial services.' The most common custodial service is a bank - they take your money and hold it for you in addition to offering various services. Stock brokers are another example of a custodial service. These services normally hold very little risk, but even they can fall into trouble during economic turmoil - such as in the 2008 financial crisis.