Which type of risk is NOT classified as unsystematic risk?

Market risk is identified as a type of risk that is classified as systematic risk, which means it affects the entire market or a large segment of it rather than being associated with a particular company or industry. Systematic risk arises from factors such as economic downturns, political instability, changes in interest rates, and market-wide events. These factors cannot be mitigated through diversification since they impact all investments to some extent.

On the other hand, unsystematic risk is specific to a company or industry and can be reduced through diversification. Examples of unsystematic risk include credit risk, operational risk, and liquidity risk. Credit risk pertains to the likelihood that a borrower will default on their obligations, operational risk involves potential losses due to internal failures, and liquidity risk refers to the difficulty in buying or selling assets without causing a significant change in their price. Thus, market risk stands apart as the type of risk that does not fall under the unsystematic classification.