Unsystematic Risk refers to the specific risk of 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 industry. Unsystematic risk is normally eliminated by diversifying the portfolio. In business valuation analysis, unsystematic risk is accommodated in the computation of the capitalisation rate per the Ibbotson Build-Up Method is as follows: