systematic risk

Systematic risk refers to the potential for widespread economic events to impact the entire market or a large segment of it, such as a recession, political instability, or natural disasters. Unlike specific risks that affect individual companies or sectors, systematic risk cannot be eliminated through diversification, as it affects all investments to some degree. It's an inherent part of the financial system, influencing overall market movements. Investors often look to manage this risk through strategies like asset allocation or utilizing financial instruments that hedge against market downturns.