Unsystematic Risk
InvestingGlossary term
Definition
Risk specific to an individual company or industry that can be reduced or eliminated through diversification. Examples include management changes, product recalls, or lawsuits. Also known as company-specific risk or diversifiable risk.
Related terms
- Systematic RiskMarket-wide risk that affects all investments and cannot be eliminated through diversification. Examples include interest rate changes, recessions, inflation, and geopolitical events. Also known as market risk or non-diversifiable risk.
- DiversificationA risk management strategy that mixes different types of investments within a portfolio. The goal is to reduce exposure to any single asset or risk.
- PortfolioA collection of financial investments like stocks, bonds, mutual funds, ETFs, and other assets. Diversifying your portfolio helps manage risk.
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