Meaning of diversifiable risk | Babel Free

Definitions

An investment risk that can be mitigated by diversification of an asset portfolio.

countable, uncountable

Examples

“The Comments certainly contemplate that, with respect⟳ to uncompensated, diversifiable risk⟳, fiduciaries act with that objective in mind⟳: “[M]ore than conservatism or a duty of caution,” the duty to diversify is a “warning” that a “central feature” of the prudence of risk-taking “ordinarily is the reduction of uncompensated risk⟳ through diversification.””

“Diversifiable risk⟳ is an asset's risk⟳ that is related to a particular business event, such as a strike⟳, and which can be overcome⟳ by diversification.”

“The risk⟳ of an investment consists of two components: diversifiable and non-diversifiable risk⟳. Diversifiable risk⟳, sometimes called unsystematic risk⟳, results from uncontrollable or random events that are company-specific, such as labour strikes, lawsuits and regulatory actions.”

CEFR level