Which of the following is NOT a diversifiable risk?

A) the risk that oil prices rise, increasing production costs

B) the risk that the CEO is killed in a plane crash

C) the risk of a key employee being hired away by a competitor

D) the risk of a product liability lawsuit

A) the risk that oil prices rise, increasing production costs

Explanation:

A diversifiable risk also known as unsystemic risk is risk that is specific only to a company. It can be mitigated against by diversifying a portfolio.

The risk that the CEO is killed in a plane crash, the risk of a key employee being hired away by a competitor and the risk of a product liability lawsuit are all specific to the company and are all diversifiable risks.

The risk that oil prices rise, increasing production costs is non diversificable risk.

Non diversificable risk is risk that can affect the whole industry or economy. Non diversificable risk cannot be avoided by diversifying the portfolio.

The risk that oil prices rise, increasing production costs isn't company specific, it would affect the whole industry or economy.