create a response: Risks in investments can be categorized into diversifiable and non$-$diversifiable risks. Diversifiable risks arise from industry$-$specific factors, such as management decisions, product failures, or supply chain disruptions. These risks are unique to individual companies or sectors$,$ they can be managed through diversification which will balance the portfolio of assets across different industries. By doing so$,$ the negative performance of one investment is offset by the positive performance of the others which will reduce overall portfolio volatility. Non$-$diversifiable risk stems from broader economic factors that affect all investments, such as inflation, interest rates, and recessions. Since these factors impact the entire market, they cannot be eliminated through diversification. Investors can control the level of unsystematic risk by strategically diversifying their portfolios, but they cannot avoid systematic risk entirely. Market$-$wide events affect all securities to some degree which makes systematic risk inherent to investing. Investors can manage their exposure to systematic risk by adjusting asset allocation or investing in lower$-$risk securities$.$ Systematic risk cannot be eliminated completely. It represents the baseline level of risk all investors must accept when participating in financial markets.

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