Characteristics
1. Broad Impact: impacts all securities in the market, regardless of the industry or company.
2. Non-Diversifiable: Since it is linked to the overall market, diversification cannot eliminate this risk.
3. Examples:
1. Economic recessions
2. Interest rate changes
3. Inflation fluctuations
4. Geopolitical tensions
Impact on Investors
Systematic risk affects the entire portfolio, no matter how well diversified it is. For instance, during the 2008 global financial crisis, stock markets worldwide experienced significant losses, demonstrating the widespread impact of systematic risk.