Idiosyncratic risk: Difference between revisions
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imported>Doug Williamson (Expand for bank regulation context. Source: MCT bank regulation study material.) |
imported>Doug Williamson (Layout.) |
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In the Capital Asset Pricing Model, the same as Diversifiable risk. Also known as Specific risk or Unsystematic risk. | |||
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The concept is also important in bank regulation and stress testing. Regulated banks must be resilient both to shocks which are market-wide, and to shocks which are idiosyncratic or specific to the regulated entity. | |||
Revision as of 14:36, 13 May 2016
1.
In the Capital Asset Pricing Model, the same as Diversifiable risk. Also known as Specific risk or Unsystematic risk.
2.
The concept is also important in bank regulation and stress testing. Regulated banks must be resilient both to shocks which are market-wide, and to shocks which are idiosyncratic or specific to the regulated entity.
