Nonsystematic Risk

Home » CMA Glossary Term » Corporate Finance » Nonsystematic Risk

Nonsystematic risk, also known as unsystematic risk, refers to the risk associated with a specific company or industry, which can be mitigated through diversification. Unlike systematic risk, which affects the entire market, nonsystematic risk is unique to individual entities and can arise from factors such as management decisions, product recalls, or regulatory changes. Investors can reduce nonsystematic risk by holding a diversified portfolio.

CMA Exam Academy 16-Week Accelerator Program