Risk that is local or limited to a particular asset or industry.
Unsystematic risk may be due to negative events like earnings miss or accounting fraud. Any event that potentially produces volatility in the stock price, like winning a major contract or mergers and acquisitions, also contribute to unsystematic risk.
As the rest of the market is largely unaffected, the unsystematic risk has limited impact on the investor’s portfolio if it is well diversified. Unsystematic risk can be avoided through diversification, by forming a portfolio of assets that are not highly correlated with one another.
Unsystematic risk is also known as company-specific, industry-specific, or diversifiable risk.
Many years ago, I was exactly where you are today—a CFA Level I candidate juggling a demanding full-time career with the daunting CFA curriculum. Coming from a Computer Engineering background, finance was entirely new territory for me. And yes, it was tough!
I struggled with dense textbooks, late-night cramming, and the frustration of concepts that seemed impossible after a long workday. But after passing Level I (barely), I realized something had to change.
Studying Smarter, Not Harder
Using the Pareto Principle (80/20 rule), I distilled the vast CFA syllabus into essential, easy-to-understand nuggets. I leaned into visual summaries and bite-sized learning sessions that worked around my busy schedule. This smarter approach helped me clear Levels II and III on my first attempts with significantly less stress.
Why PrepNuggets?
I founded PrepNuggets to share the streamlined strategies and innovative learning methods that transformed my CFA journey. Our mission is simple: leverage technology to make CFA prep more effective, accessible, and enjoyable.
Join the PrepNuggets community today—sign up for your free account, and let our thoughtfully crafted materials propel you toward CFA success without unnecessary overwhelm.
Here’s to your CFA journey!
Keith Tan, CFA
Founder & Chief Instructor, PrepNuggets
About the Author
PrepNuggets
Keith is the founder and chief instructor of PrepNuggets. He has a wide range of interests in all things related to tech, from web development to e-learning, gadgets to apps. Keith loves exploring different cultures and the untouched gems around the world. He currently lives in Singapore but frequently travels to share his knowledge and expertise with others.
