Unsystematic risk

Unsystematic risk is company-specific risk or idiosyncratic risk which is not spread to the wider universe or market. 


Unsystematic risk includes loss suffered from events like death of key persons in the company, fraud committed in or by the company, or some upset caused restricted to the company. 

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However, unsystematic risk, can also be positive for a company, with certain occurrences such as a competitor going bankrupt, and products or marketing communication going viral. 

An investor can protect themselves from unsystematic risk by diversifying their portfolio well. A diversified portfolio mostly has to deal with systematic or market risk when choosing the asset classes.