Unsystematic risk is the extent of variability in the stock or security’s return on account of factors that are unique to a company. Unsystematic risk is due to factors specific to an industry or a company like labour unions, product category, research and development, pricing, marketing strategy, etc. Unsystematic risk can be mitigated through portfolio diversification, i.e., this type of risk can be diversified away by investing in more than one company because each company is different and therefore this risk is also called diversifiable risk. It is a risk that can be avoided and the market does not compensate for taking such risks. It is also known as asset- specific risk or company-specific risk.