Systematic risk definition

Systematic risk is the risk that the entire financial system, rather than a single stock or industry, will be affected by a particular event or series of events.

This occurred during the global financial crisis of 2008 where subprime debt issues and the subsequent collapse of major financial institutions, such as Lehman Brothers, caused stock markets to drop worldwide.

Other examples of systematic risk can include natural disasters, war and major political or regulatory change.

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