What is one factor that systematic risk encompasses?

Systematic risk, often referred to as market risk, is the risk inherent to the entire market or a segment of the market. It encompasses factors that can affect a broad range of investments, as opposed to risks that are specific to individual companies or sectors. Market-wide economic changes, such as fluctuations in interest rates, inflation, economic recessions, or political instability, can impact all investments within the market. These factors cannot be mitigated through diversification, as they affect a wide array of assets simultaneously.

In contrast, the other options represent risks that are more localized or specific to individual entities or businesses and can often be managed through diversified investment strategies. Hence, these do not fall under the umbrella of systematic risk.