Specific Risk

AAA

DEFINITION of 'Specific Risk'

Risk that affects a very small number of assets. Specific risk, as its name would imply, relates to risks that are very specific to a company or small group of companies. This type of risk would be the opposite of an overall market risk, or systematic risk.


Sometimes referred to as "unsystematic or diversifiable risk."

INVESTOPEDIA EXPLAINS 'Specific Risk'

An example of specific risk would be news that is specific to either one stock or a small number of stocks, such as a sudden strike by the employees of a company, or a new governmental regulation affecting a particular group of companies. Unlike systematic risk or market risk, specific risk can be diversified away.

RELATED TERMS
  1. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. ...
  2. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  3. Market Risk

    The possibility for an investor to experience losses due to factors ...
  4. Risk

    The chance that an investment's actual return will be different ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments ...
  6. Overall Liquidity Ratio

    A measurement of a company’s capacity to pay for its liabilities ...
Related Articles
  1. Bonds & Fixed Income

    The Importance Of Diversification

  2. Options & Futures

    Financial Concepts

  3. Mutual Funds & ETFs

    What does a mutual fund's beta coefficient ...

  4. Mutual Funds & ETFs

    How do I judge a mutual fund's performance?

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center