specific risk


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Specific risk

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.

specific risk

or

diversifiable risk

that part of total risk (within the CAPITAL-ASSET-PRICING MODEL) uniquely attributable to the holding of a specific financial security. Unlike MARKET RISK, specific risk is independent of general market variations. Events unique to a particular security may comprise such corporate decisions as dividend policy, changes in capital structure, recruitment of top personnel and so forth. Changes in a firm's share price may be positive or negative depending upon the opinion of investors. The argument is that such specific variations occur randomly and therefore if a sufficiently large and well-diversified PORTFOLIO of shares is held, such variations will cancel each other out. This means that investors can eliminate specific risk by diversifying their portfolio.
References in periodicals archive ?
A UHS spokesman said: "Babies receive an ultrasound selectively if potential DDH is found on physical examinations around the time of birth or at six weeks, or if the infant has specific risk factors.
the contractors~ rates shall include for the preparation of site specific risk assessments, method statements and temporary traffic management plans as required please carefully review the tender instruction document.Type of contract: services
A specialized underwriter, agent or account executive will work with you to create a policy that addresses your specific risk areas.
JazzCash views insurance as a key component of its bouquet of financial services and looks forward to offering products meeting specific risk needs of our clients in collaboration with MicroEnsure.
The company joins an elite group of big data analytics firms with this certification, a process-based standard which mandates specific risk control requirements to maintain the highest levels of data and information security.
The report recommends public awareness should be directed at specific risk factors, such as ensuring adult supervision of young children or reducing exposure to water hazards.
They used a formula called population attributable risk (PAR), which indicates the percentage reduction in disease that would be achieved in a given population if their exposure to a specific risk were to be eliminated.
There is no evidence at present of any specific risk to public health from consuming this product.
He then built a risk model that revealed specific risk factors associated with heart attack risk.
Moves in EURUSD or GBPUSD are largely governed by changes in four key drivers: general risk appetite, interest rate differentials, country specific risk and oil prices:
The parameters can be set simultaneously, which BATS claims will help members meet their specific risk management needs.