Systematic risk is the risk that affects the overall financial market and cannot be eliminated through diversification. It arises from broad economic factors such as inflation, interest rate changes, geopolitical developments, economic slowdowns, and changes in government policies. Unlike company-specific risk, systematic risk influences nearly all securities across sectors and asset classes. Investors often assess the impact of systematic risk by tracking benchmark indices such as the Nifty 50 and BSE Sensex, as these reflect broader market trends and investor sentiment. Understanding systematic risk helps investors set realistic return expectations and build portfolios that align with their risk tolerance.
