Diversification occurs when an investor spreads funds among several different types of investments so that their income and capital gains are not wholly dependent on the performance of a single security. Diversification is typically used to reduce exposure to unsystematic risk which refers to the specific risks associated with a specific company or industry. This risk arises when an individual or corporate body invests in the stocks of a particular company and as a result becomes exposed to risks which impact the business or the industry. In business valuation analysis, unsystematic risk is accounted for in the computation of the capitalisation rate via the Ibbotson Build-Up Method. Investing in stocks also exposes the investor to systematic risks which refer to the underlying risk that all risky securities are exposed such as exchange fluctuations or depreciation of the currency. Such risks cannot be eliminated through diversification of the portfolio.