specific risk

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Specific risk

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

specific risk


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.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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A specialized underwriter, agent or account executive will work with you to create a policy that addresses your specific risk areas.
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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.
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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.
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The parameters can be set simultaneously, which BATS claims will help members meet their specific risk management needs.