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Types of Risk 1

The document discusses different types of risk. It defines risk as the potential for loss or unwanted outcomes from actions or inactions. In finance, risk refers to losses that could impact a project's productivity, tenure, or legal issues. Risks are classified as either systematic or unsystematic. Systematic risk stems from uncontrollable macro-level external factors that affect many organizations, while unsystematic risk is micro-level and controllable by an individual organization.

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421 views1 page

Types of Risk 1

The document discusses different types of risk. It defines risk as the potential for loss or unwanted outcomes from actions or inactions. In finance, risk refers to losses that could impact a project's productivity, tenure, or legal issues. Risks are classified as either systematic or unsystematic. Systematic risk stems from uncontrollable macro-level external factors that affect many organizations, while unsystematic risk is micro-level and controllable by an individual organization.

Uploaded by

gaurav112011
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
  • Types of Risk

Types of Risk

 Risk implies the extent to which any chosen action or an inaction that may lead to
a loss or some unwanted outcome. The notion implies that a choice may have an
influence on the outcome that exists or has existed.
 However, in financial management, risk relates to any material loss attached to
the project that may affect the productivity, tenure, legal issues, etc. of the
project.
 In finance, different types of risk can be classified under two main groups, viz.,

Systematic risk.

Unsystematic risk.

The meaning of systematic and unsystematic risk in finance:

Systematic risk is uncontrollable by an organization and macro in nature.

Unsystematic risk is controllable by an organization and micro in nature.

A. Systematic Risk
 Systematic risk is due to the influence of external factors on an organization. Such
factors are normally uncontrollable from an organization's point of view.
 It is a macro in nature as it affects a large number of organizations operating
under a similar stream or same domain. It cannot be planned by the organization.
 The types of systematic risk are depicted and listed below.

(https://lh5.googleusercontent.com/-64dBMtOISq8/Tx9KC5eaD6I/AAAAAAAAFpg/ytuR-nFhUAY/s800/Types-of-Risk.png)Types of Risk  R

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