Company-specific risk

Company-specific risk

Company-Specific Risk

An unsystemic risk specific to a certain company's operations and reputation. For example, if a widget wholesaler has only one supplier and the supplier goes bankrupt, this could greatly impact the wholesaler's sales, profits, and other operations. Also, a company may have a bad reputation, making their operations difficult in a certain area. For example, a company that refuses to hire union workers might prove unprofitable if it opens a branch in a strongly pro-union town. Company-specific risks are difficult to quantify and thus qualitative analysis is needed to determine their natures and likelihoods. They may be reduced by appropriate diversification.
References in periodicals archive ?
We do not incorporate any potential new acquisitions into our model, but we believe it is prudent to account for this risk by increasing our company-specific risk estimate.
The company-specific risk premium is added when the company is more risky in the remaining market.
The enterprise equity discount (yield) rate includes three elements: (1) a market-derived, risk-free rate of return; (2) a general (equity) risk premium derived from the public equity markets; and (3) a company-specific risk adjustment.
Small businesses have much more company-specific risk than larger companies--Discount rates, used to value businesses, have a "company-specific risk factor.
An investor can eliminate more than 99 percent of company-specific risk with a portfolio of as few as 20 stocks.
In this article, we will discuss three publications that can serve as a foundation for developing a company-specific risk management framework:
The models vary widely, but most rely on two distinct, but interrelated, levels of analysis: a macro assessment of overall country risk and a micro assessment of industry-segment or company-specific risk.
Although we are pleased with Dollar General's fourth-quarter results, we prefer to own Family Dollar, given faster square-foot growth, higher operating margins and less company-specific risk," he said.
This witness derived the capitalization rate from the Ibbotson build-up method, which uses publicly traded company returns, adds company-specific risk factors and subtracts an estimate of the company's long-term growth rate.
After all, the shareholder value theory most of us were weaned on holds that company-specific risk can be diversified away by the investors themselves.
FT-500 index) allows the investor to diversify away from company-specific risk (because returns are less than perfectly correlated with each other), and this reduces the total risk of their portfolio.
Peylina helps companies manage the business aspects of environment, health and safety (EHS) through developing customized EHS programs that are proactive, tailored to company-specific risk tolerance levels and incorporated into company culture.