Question

How does Systematic (Systemic) Risk fundamentally differ from Specific / Idiosyncratic Risk in financial risk management?

A Systematic risk affects only micro-finance borrowers, whereas idiosyncratic risk affects large corporate borrowers.
B Systematic risk can be completely eliminated through diversification, whereas idiosyncratic risk cannot.
C Systematic risk affects the entire financial system or market as a whole, whereas idiosyncratic risk is isolated to a single firm or institution.
D Systematic risk is governed by SARFAESI provisions, while idiosyncratic risk is governed by the SCBMF committee.
E Systematic risk arises solely from internal employee frauds within a branch.
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