Overall, the events that can impact your investments can be “systematic” or “unsystematic.”
Systematic risks include events that do not affect a particular asset but the entire market, so they
could end up impacting all the products or services in your portfolio. They're considered “external,” so
they are not diversifiable, controllable, or predictable. These are some examples:
- Market changes
- Uncontrollable inflation
- Rising interest rates
- Accidents
Contrastingly, unsystematic risks are the ones that do not affect the entire market but rather a
particular asset, the holder, or the industry. These events are diversifiable through certain
portfolio-related strategies. However, they're still inevitable. These are some examples:
- Liquidity issues
- Business-related risks, such as strikes
- The holder’s debt and financial situation