Systematic vs. Unsystematic Risk (Exam Classification)

How the NASAA outline sorts the named types of risk.

Economics & Financial Reporting Series 65 · Section 1

What is Systematic vs. Unsystematic Risk (Exam Classification)?

The June 2023 outline gives interest rate risk, sector risk, and geopolitical risk as examples of systematic risk, and credit risk, legal/regulatory risk, financial risk, and issuer-specific risk as examples of unsystematic risk. Market risk and purchasing power (inflation) risk are also systematic. Financial risk is the risk created by a company's use of leverage.

Systematic vs. Unsystematic Risk (Exam Classification): a worked example

Many textbooks call sector risk diversifiable. On the exam, follow the outline: it lists sector risk as systematic.

What is the difference between Systematic vs. Unsystematic Risk (Exam Classification) and Systematic Risk (Market Risk)?

The general concept is in the Risk & Return unit. This card is the exam's specific sorting of named risks.

Often confused with Systematic Risk (Market Risk) - see Systematic vs. Unsystematic Risk (Exam Classification) vs Systematic Risk (Market Risk) side by side.

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