Finance Specific Risk
Finance-Specific Risk
Finance-specific risk, also known as unsystematic risk or diversifiable risk, refers to the uncertainty inherent in individual investments or within a particular financial institution. Unlike systematic risk, which affects the entire market (e.g., interest rate changes, inflation), finance-specific risk is unique to a company, industry sector, or specific financial product. Effectively managing this type of risk is crucial for investors and financial institutions aiming to achieve optimal returns and stability.