Idiosyncratic risk

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Revision as of 12:25, 1 September 2015 by imported>Doug Williamson (Expand for bank regulation context. Source: MCT bank regulation study material.)
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  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.


See also

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