While some idiosyncratic risks
remain, three data points underscore the change on the ground:
Fitch deems this level provides enough protection against idiosyncratic risks
Investors will increasingly need to differentiate between countries based on idiosyncratic risks
, as per the report.
If the idiosyncratic risks
associated with CSI are diminished by SPF, this (CSI + SPF) could be an attractive and prudent investment strategy for those investment funds investors wish to allocate to achieve aspirational wealth.
On the downside would be an unexpected additional drop in commodities prices or materialisation of idiosyncratic risks
such as political risks or lack of economic reforms.
Looking at insurance bidders, they exhibit increases in total and idiosyncratic risks
and a decrease in systematic risk in the pre-2007 period, whereas all their risk components are reduced in the post-2007 deals.
The reason is the inefficiency of financial markets or/and a lack of social insurance program that prevents people from managing idiosyncratic risks
in developing countries (Jha and Dang, 2010).
In the risk-factor frameworks that underpin the internal ratings-based (IRB) risk weights of Basel II, credit risk in a portfolio arises from two sources, systematic and idiosyncratic risks
Firms may be inclined to withdraw an authority when they face negative systematic and idiosyncratic risks
, bringing them close to financial distress.
Accordingly, Fitch views community banks as more susceptible to idiosyncratic risks
such as geographic and single-name concentrations.
For instance, Hackbarth, Miao, and Morellec (2006) propose a model in which firms' cash flows are conditional on both idiosyncratic risks
and macroeconomic conditions.
Supply chain risk management activities in general should be focused on reducing those risks that have the greatest impact on the firm's competitive position, which generally dictates focusing on event risk and idiosyncratic risks
rather than systemic supply chain risks.