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unsystematic risk

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Risk Magazine
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Financial Dictionary

Unsystematic Risk

Risk that affects a very small number of assets. Sometimes referred to as specific risk.

Investopedia Commentary

For example, news that is specific to a small number of stocks, such as a sudden strike by the employees of a company you have shares in, is considered to be an unsystematic risk.

Related Links

Determining Risk And The Risk Pyramid
Achieving Optimal Asset Allocation
Understanding Volatility Measurements

See also: Risk, Risk-Return Tradeoff, Systematic risk

Also spelled: un-systematic risk

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Risk Magazine
Risk Magazine is dedicated to risk management & derivatives. Save 15%!
www.risk.net
Financial Dictionary

unsystematic risk

The risk that is specific to an industry or firm. Examples of unsystematic risk include losses caused by labor problems, nationalization of assets, or weather conditions. This type of risk can be reduced by assembling a portfolio with significant diversification so that a single event affects only a limited number of the assets. Compare systematic risk. Also called diversifiable risk.

Wall Street Words: An A to Z Guide to Investment Terms by David L. Scott.
Copyright © 2003. Published by Houghton Mifflin.
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