Nonsystematic risk

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Nonsystematic risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Nonsystematic Risk

Risk that is unique to a certain asset or company. An example of nonsystematic risk is the possibility of poor earnings or a strike amongst a company's employees. One may mitigate nonsystematic risk by buying different of securities in the same industry and/or by buying in different industries. For example, a particular oil company has the diversifiable risk that it may drill little or no oil in a given year. An investor may mitigate this risk by investing in several different oil companies as well as in companies having nothing to do with oil. Nonsystematic risk is also called diversifiable risk. See also: Undiversifiable risk.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Nonsystematic risk.

Nonsystematic risk results from unpredictable factors, such as poor management decisions, successful competitive products, or suddenly obsolete technologies that may affect the securities issued by a particular company or group of similar companies.

Portfolio diversification, which means spreading your investment among a number of asset subclasses and individual issuers within those subclasses, can help counter nonsystematic risk.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
First-year university students are at particular risk, the charity added.
Meanwhile, the vaccination rate is even lower for children not considered to be at particular risk, despite the vaccination programme being extended to all two- and three-year-olds in 2013-14 in order to help prevent the disease from spreading.
Shocking new figures from Public Health England reveal more than 200 two and three year olds in Liverpool who are considered at particular risk went without a vaccination last flu season.
Manchester has an even lower vaccination rate for children not considered to be at particular risk. In 2013/14, the vaccination programme was extended to all two and three year olds in order to help prevent the disease from spreading.
Our solution is tailored to meet plan participants' needs based on where they are in the retirement cycle and their particular risk profile.
Summary: Unemployed, people in rented homes and retired home owners with health problems identified as being at particular risk
The report notes: 'There is a particular risk around meeting the fourth carbon budget which begins in just five years' time.
She added: "Children too young to be vaccinated, or who are immune-compromised, are at particular risk from these conditions.
The NHS warns this could pose a particular risk to the elderly and other vulnerable groups who come into contact with children at family get-togethers.
Seniors are at particular risk, but although the vaccine is recommended for adults age 60 and older, it is underutilized.
Furthermore the authorities should have known that women who are mentally ill during pregnancy are at particular risk during the first three months after delivery.
Since the 1970s, accidents have no longer been attributed to divine will, blind faith, or destiny, says Dekker, but are evidence that a particular risk was not managed well enough, and behind that mismanagement there is a specific person or people to hold accountable.