Fin 571 week 5 discussion systematic and
unsystematic risk
Go to the bottom of the file to see the first response
Post a total of 3 substantive responses over 2 separate days for full participation.
This includes your initial post and 2 replies to other students or your faculty member.
Due Thursday
You are the Chief Risk Officer for a company and you’ve been tasked with identifying the
areas where your company is exposed to systematic and unsystematic risks.
Respond to the following in a minimum of 175 words:
Based on the information you learned this week, what approach would you take in
explaining how systematic and unsystematic risks affect risk planning?
Describe your approach.
Name 3 or more systematic or unsystematic risks your company might face.
Think of some implications if your company decides not to be proactive and plan for
these risks.
Due Monday
Reply to at least 2 of your classmates or your faculty member. Be constructive and
professional.
Mayra Harrell
13 hours ago, at 11:13 AM
NEW
Investments are risky since there is no control of how the money is handled. The control
there is with investments is where the money is being invested to. The approach I
would take is explain thoroughly about systematic and unsystematic risks and how they
affect risk planning. Systematic risks are the uncontrolled investments that are being
,held by companies. They are to be unpredictable and unavoidable. Unsystematic risks
are certain investments that are under particular stocks with certain companies. My
company faces systematic risk due to law changes, interest rate hikes, and economic
recessions. Due to COVID-19, there has been little loss due to the economic recession
because fortunately the interest rates have not increased. Mortgages however have
suffered based on the lack of payments due to the spike in unemployment and decrease
in income. If the company is not proactive, the loss would be major. Keeping the
company proactive is increasing the probability of the company and seeing a decrease
in loss Work is extremely busy as consumers are taking advantage of the very low rates.
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Reply Edit Draft•Last edited
5/26/20, 11:13 AM
|
PROF
Cassaundra Asher
16 hours ago, at 8:32 AM
NEW
Risk planning is a strong part of any investment portfolio. Investments themselves are
risky, since an investor typically has no control over how their money is handled, they
do have control or where it goes and how risky that investment may be. Systemic risks
are those that uncontrolled by the company holding the investments. This includes
market volatility and macroeconomic factors. Unsystematic risks are directly related to
internal companies and are a smaller scale than systemic risks. The company I work for
may face some systemic risks currently, would be how people approach health care
moving forward in the wake of covid-19. While medical care, in general, can be
considered necessary many people are opting out of elective care. This will cost
insurance companies a lot of money. Unystemic risks include changes in our labor force,
including management. The company has already laid off 25 people, including a few
management positions. Morale is low and work is slow. We have already began being
proactive through layoffs. While it’s not ideal, it will keep the company afloat while our
medical claim count is low.
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5/26/20, 8:32 AM
| Hide Replies (2) NEW
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PROF
Veronica Alvarez
20 hours ago, at 3:54 AM
When doing some research to better under systematic and unsystematic risk I found the
following article, which I found to be interesting:
EXAMPLE OF SYSTEMATIC RISK
,The Great Recession of 2008 proves to be a key example of systematic risk. People who
had invested in all kinds of securities saw the values of their investments fall due to the
market-wide economic event. The great recession affected various securities in diverse
ways. Thus, investors who held stocks were affected in adverse ways as compared to
those with wider asset allocations.
EXAMPLE OF UNSYSTEMATIC RISK
Unsystematic risks are majorly related to errors in entrepreneurial judgment. For
example, a technology corporation might undertake market research and expect a rise
in demand for smaller cell phones and digital watches in the coming year. For that,
production lines are altered and capital is dedicated toward smaller devices.
However, the company realizes in the next year that consumers are more inclined
towards bigger phones and watches. Thus, the inventory and machinery obtained by the
company later sells at a major loss or remains unsold. This will, in turn, harm the stock
prices of the company. Thus, all the other firms in the technology sector might perform
well while this company will backtrack due to poor entrepreneurial foresight.
https://efinancemanagement.com/investment-decisions/systematic-vs-unsystematic-
risks
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5/26/20, 3:54 AM
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PROF
Amanda King
5/25/20, 10:27 AM
The approach that I would take in explaining how systematic and unsystematic risks
affect risk planning are making sure that I explain to my team how each could effect the
company. Systematic risks are not just going to effect our business but they are going to
affect the market as a whole. These types of risks are unpredictable and can be seen as
an unavoidable risk to be taken. Sometimes when a company is beginning to roll out a
new product, for instance, then their competing company could try and do the same
thing. This could be classified as a systematic risk for the competing company.
Unsystematic risks are usually in connection with an investment or companies stock.
These types of risks can be better known as diversifiable risks. Some of the risks that
can be associated with unsystematic could be regulation changes, new companies
entering the market or even recalls. As an example, we have seen when car companies
recall some of their vehicles due to mechanical errors. This is classified as an
unsystematic risk as this type of risk is only going to affect the car industry and not
multiple industries.
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Reply Edit Draft•Last edited
5/25/20, 10:27 AM
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PROF
Kasmirah Jones
5/25/20, 8:11 AM
, NEW
Systematic risk is inherent to the market as a whole not just a particular stock or
industry. Systematic risks are unpredictable and they are looked at as being an
unavoidable risk. To help manage systematic risk investors should make sure their
portfolios include a variety of assets classes, such as fixed income, cash, real estate
because each will react differently if there is a major systematic change. Three
systematic risks that could affect a business are, changes to laws, tax reforms, and
interest rate hikes. Unsystematic risk are risks associated with a particular investment
such as a company’s stock. Unsystematic risk can re lessened through diversification
and is known as diversifiable risk. Once diversified investors are still subject to market-
wide systematic risk. Three examples of unsystematic risk are, a change in regulations
that impacts one industry, a new competing company entering the market, and if a
company is forced to recall one of its products.
Reference:
https://www.investopedia.com/terms/s/systematicrisk.asp
https://www.netcials.com/investment-guide/9-examples-systematic-risks/
https://www.accountingtools.com/articles/unsystematic-risk.html
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Reply Edit Draft•Last edited
5/25/20, 8:11 AM
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PROF
Joseph Mc Donald
5/24/20, 6:44 PM
NEW
Week 5 Day 6 - Raise Capital on Your Own Terms : How to Fund Your Business Without Selling Your
Soul
Class this article is absolutely awesome I had to share with you! I enjoyed this one part
on raising capital how much confusion, complexity and hard it is to find the right
investors for your company! I been there trust me on this one! Actually I been on both
sides:)
“The amount of misinformation and confusion out there about raising capital from
investors is staggering! I cannot tell you how many times I have been at presentations
by “experts” and listened with amazement as they confidently informed the audience of
“facts” about capital raising that were completely incorrect. If experts like lawyers and
finance specialists are so often wrong on this topic, imagine how hard it is for the
layperson entrepreneur to get the full and correct picture.”
The author is so right you have to be so careful when dealing with these so-called
experts in the field of litigation and finance when raising capital. Do your homework,
start a task sheet for yourself, make it simple enough so you don’t get lost in the work,
set goals, meet often and most importantly listen and seek advice as needed. I often go
to my peers in the company, the board, and any other type of management when
starting a capital fundraising event. Investors on the opposite side are doing the same
type of research work like you in trying to see if it’s a good fit. Don’t get caught up in
unsystematic risk
Go to the bottom of the file to see the first response
Post a total of 3 substantive responses over 2 separate days for full participation.
This includes your initial post and 2 replies to other students or your faculty member.
Due Thursday
You are the Chief Risk Officer for a company and you’ve been tasked with identifying the
areas where your company is exposed to systematic and unsystematic risks.
Respond to the following in a minimum of 175 words:
Based on the information you learned this week, what approach would you take in
explaining how systematic and unsystematic risks affect risk planning?
Describe your approach.
Name 3 or more systematic or unsystematic risks your company might face.
Think of some implications if your company decides not to be proactive and plan for
these risks.
Due Monday
Reply to at least 2 of your classmates or your faculty member. Be constructive and
professional.
Mayra Harrell
13 hours ago, at 11:13 AM
NEW
Investments are risky since there is no control of how the money is handled. The control
there is with investments is where the money is being invested to. The approach I
would take is explain thoroughly about systematic and unsystematic risks and how they
affect risk planning. Systematic risks are the uncontrolled investments that are being
,held by companies. They are to be unpredictable and unavoidable. Unsystematic risks
are certain investments that are under particular stocks with certain companies. My
company faces systematic risk due to law changes, interest rate hikes, and economic
recessions. Due to COVID-19, there has been little loss due to the economic recession
because fortunately the interest rates have not increased. Mortgages however have
suffered based on the lack of payments due to the spike in unemployment and decrease
in income. If the company is not proactive, the loss would be major. Keeping the
company proactive is increasing the probability of the company and seeing a decrease
in loss Work is extremely busy as consumers are taking advantage of the very low rates.
CancelSave
Reply Edit Draft•Last edited
5/26/20, 11:13 AM
|
PROF
Cassaundra Asher
16 hours ago, at 8:32 AM
NEW
Risk planning is a strong part of any investment portfolio. Investments themselves are
risky, since an investor typically has no control over how their money is handled, they
do have control or where it goes and how risky that investment may be. Systemic risks
are those that uncontrolled by the company holding the investments. This includes
market volatility and macroeconomic factors. Unsystematic risks are directly related to
internal companies and are a smaller scale than systemic risks. The company I work for
may face some systemic risks currently, would be how people approach health care
moving forward in the wake of covid-19. While medical care, in general, can be
considered necessary many people are opting out of elective care. This will cost
insurance companies a lot of money. Unystemic risks include changes in our labor force,
including management. The company has already laid off 25 people, including a few
management positions. Morale is low and work is slow. We have already began being
proactive through layoffs. While it’s not ideal, it will keep the company afloat while our
medical claim count is low.
CancelSave
Reply Edit Draft•Last edited
5/26/20, 8:32 AM
| Hide Replies (2) NEW
Save DraftCancelReply
PROF
Veronica Alvarez
20 hours ago, at 3:54 AM
When doing some research to better under systematic and unsystematic risk I found the
following article, which I found to be interesting:
EXAMPLE OF SYSTEMATIC RISK
,The Great Recession of 2008 proves to be a key example of systematic risk. People who
had invested in all kinds of securities saw the values of their investments fall due to the
market-wide economic event. The great recession affected various securities in diverse
ways. Thus, investors who held stocks were affected in adverse ways as compared to
those with wider asset allocations.
EXAMPLE OF UNSYSTEMATIC RISK
Unsystematic risks are majorly related to errors in entrepreneurial judgment. For
example, a technology corporation might undertake market research and expect a rise
in demand for smaller cell phones and digital watches in the coming year. For that,
production lines are altered and capital is dedicated toward smaller devices.
However, the company realizes in the next year that consumers are more inclined
towards bigger phones and watches. Thus, the inventory and machinery obtained by the
company later sells at a major loss or remains unsold. This will, in turn, harm the stock
prices of the company. Thus, all the other firms in the technology sector might perform
well while this company will backtrack due to poor entrepreneurial foresight.
https://efinancemanagement.com/investment-decisions/systematic-vs-unsystematic-
risks
CancelSave
Reply Edit Draft•Last edited
5/26/20, 3:54 AM
| Show Replies (7) NEW
PROF
Amanda King
5/25/20, 10:27 AM
The approach that I would take in explaining how systematic and unsystematic risks
affect risk planning are making sure that I explain to my team how each could effect the
company. Systematic risks are not just going to effect our business but they are going to
affect the market as a whole. These types of risks are unpredictable and can be seen as
an unavoidable risk to be taken. Sometimes when a company is beginning to roll out a
new product, for instance, then their competing company could try and do the same
thing. This could be classified as a systematic risk for the competing company.
Unsystematic risks are usually in connection with an investment or companies stock.
These types of risks can be better known as diversifiable risks. Some of the risks that
can be associated with unsystematic could be regulation changes, new companies
entering the market or even recalls. As an example, we have seen when car companies
recall some of their vehicles due to mechanical errors. This is classified as an
unsystematic risk as this type of risk is only going to affect the car industry and not
multiple industries.
CancelSave
Reply Edit Draft•Last edited
5/25/20, 10:27 AM
| Show Replies (6) NEW
PROF
Kasmirah Jones
5/25/20, 8:11 AM
, NEW
Systematic risk is inherent to the market as a whole not just a particular stock or
industry. Systematic risks are unpredictable and they are looked at as being an
unavoidable risk. To help manage systematic risk investors should make sure their
portfolios include a variety of assets classes, such as fixed income, cash, real estate
because each will react differently if there is a major systematic change. Three
systematic risks that could affect a business are, changes to laws, tax reforms, and
interest rate hikes. Unsystematic risk are risks associated with a particular investment
such as a company’s stock. Unsystematic risk can re lessened through diversification
and is known as diversifiable risk. Once diversified investors are still subject to market-
wide systematic risk. Three examples of unsystematic risk are, a change in regulations
that impacts one industry, a new competing company entering the market, and if a
company is forced to recall one of its products.
Reference:
https://www.investopedia.com/terms/s/systematicrisk.asp
https://www.netcials.com/investment-guide/9-examples-systematic-risks/
https://www.accountingtools.com/articles/unsystematic-risk.html
CancelSave
Reply Edit Draft•Last edited
5/25/20, 8:11 AM
| Show Replies (2) NEW
PROF
Joseph Mc Donald
5/24/20, 6:44 PM
NEW
Week 5 Day 6 - Raise Capital on Your Own Terms : How to Fund Your Business Without Selling Your
Soul
Class this article is absolutely awesome I had to share with you! I enjoyed this one part
on raising capital how much confusion, complexity and hard it is to find the right
investors for your company! I been there trust me on this one! Actually I been on both
sides:)
“The amount of misinformation and confusion out there about raising capital from
investors is staggering! I cannot tell you how many times I have been at presentations
by “experts” and listened with amazement as they confidently informed the audience of
“facts” about capital raising that were completely incorrect. If experts like lawyers and
finance specialists are so often wrong on this topic, imagine how hard it is for the
layperson entrepreneur to get the full and correct picture.”
The author is so right you have to be so careful when dealing with these so-called
experts in the field of litigation and finance when raising capital. Do your homework,
start a task sheet for yourself, make it simple enough so you don’t get lost in the work,
set goals, meet often and most importantly listen and seek advice as needed. I often go
to my peers in the company, the board, and any other type of management when
starting a capital fundraising event. Investors on the opposite side are doing the same
type of research work like you in trying to see if it’s a good fit. Don’t get caught up in
