Incident Response is the organized approach a protocol takes when a security breach or exploit is detected in production. A comprehensive incident response plan includes monitoring and detection systems (such as Forta or custom watchers), predefined escalation procedures, emergency pause mechanisms (circuit breakers), communication templates for users and stakeholders, and post-mortem analysis processes. In Web3, response time is critical because exploits can drain funds within minutes of detection. Protocols with mature incident response plans typically include war room procedures, pre-authorized bug bounty contacts, and automated alerting that triggers when on-chain activity deviates from expected patterns.