Unsystematic risk is much more focused than systematic risk. The
             latter focuses on large classes of assets, liabilities and the market.
             Large-scale events such as economic change or political events influence a
             large market portion. Systematic risk entails that all assets are more or
             less affected by moves in the market. The risk thus involves the possible
             decline in asset values. Unsystematic risk on the other hand occurs in
             terms of a specific security or group of securities, and the events
             influencing only that security. Because this risk factor is so focused, it
             is seldom influenced by the general market and the way in which it moves.
             Prices may change as a result of just the specifically focused event.
             Diversification is used to reduce risk. The way in which companies
             do this is to combine many different kinds of investments. Possible
             investments include stocks, bonds, and real estate. The risk factor is
             reduced because the variety of investments are so diverse that they are not
             likely to move in the same direction, hence reducing the risk of losing all
             assets through global market movements. Not all investments therefore are
             increased or reduced in value at the same time or rate, making
             diversification a valuable tool for reducing risk.
             A wide range of economic conditions are allowed for, because both
             positive and negative value movements are taken into account. Because
             these movements are both reduced, wild market fluctuations are replaced by
             a more consistent performance in investments. Whereas systematic risk does
             not lend itself readily to diversification, nonsystematic risk can be
             nearly eliminated by this technique.
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