What type of risk is associated with specific companies or industries?

Non-systematic risk refers to the uncertainty associated with specific companies or industries. This type of risk is unique to a particular company or sector and can result from factors such as management decisions, competitive position, regulatory environment, and other localized variables that may not impact the entire market. Since it is specific to a company or industry, it can often be mitigated through diversification, where an investor spreads their investments across various sectors and companies to reduce the impact of any one particular risk.

Systematic risk, on the other hand, is the risk inherent to the entire market, influenced by factors such as economic changes, political events, or natural disasters. This type of risk cannot be eliminated through diversification. Systemic risk, while often confused with systematic risk, refers to the risk of collapse of an entire financial system or market, rather than risks related to specific entities. Market risk encompasses the broader movements in the financial markets that affect all investments, making it different from the non-systematic risk attributed to individuals or small groups of securities.