What is a systematic risk?

Systematic risk is related to the risk that is present in any market segment or on the market as a whole. This type of risk, sometimes referred to as a market risk or an insumable risk, has the potential to influence the entire market segment or even the whole market and cannot be avoided by using different investment strategies. Although the systemic risk is self -risk and cannot be avoided, there are ways to minimize the effects of risk and to some extent to protect the investment portfolio. One example of this type of risk is war. When involved in the war, the economy is seriously affected by many ways. While some market sectors may prosper during the war, there is also a great potential for many other market sectors to be adversely affected, especially if the war itself reduces the demand for certain goods or services or divert the resources needed with these industries to produce their product lines.

Entry into the recession period is another example of systematic risk. Many industries are likely to suffer from the recession. Shifts of goods and services costs, changes in consumer demand and the resulting unemployment that occurs often affects production, banking, telecommunications, real estate and even retail industry in an extremely significant way. For the investor, the recession can mean preparation for significant losses from investment that were previously profitable. The investor may decide to start from the economic period in the hope that these investments will recover or try to sell them, reduce losses and identify any type of investment that is more likely to be at least its value until the recession runs.

and at the same time avoiding the impact of any type of systemicizico tic is very unlikely, there are ways to face this risk and try to alleviate the effect to some extent. Some investors have found that the strategy of securing mIt can minimize damage caused by this type of risk. While others see approach to changing portfolio shares as an effective way to deal with systematic risk, even the most diverse collection of assets still has a certain degree of risk and is likely to suffer at least a certain amount of loss.