unsystematic risk

Unsystematic Risk

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

Notes:

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.

See also: Risk, Systematic risk

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Unsystematic risk

Also called the diversifiable risk or residual risk. The risk that is unique to a company such as a strike, the outcome of unfavorable litigation, or a natural catastrophe that can be eliminated through diversification. Related: Systematic risk.

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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. Also called diversifiable risk. Compare systematic risk.