Systematic Risk or market risk is a type of risk that is common to the entire market such as interest rates, recessions, or environmental disasters. Systematic risk is also known as non-diversifiable risk as it cannot be reduced by investing in a large pool of assets. Systematic risk is measured by beta.

Unsystematic risk or specific risk is a risk that is specific to a company or industry such as an employee strike, a lawsuit, or a corporate scandal. In contrast to systematic risks, unsystematic risks are diversifiable by investing in a diversified pool of assets.


A more comprehensive content for the concept will be available later.

We will include related examples and CFA questions that are also hyperlinked to the appropriate definitions.