Risks, effects and stakeholdersAt some point in our lives, we have all faced some form of risk, whether systematic or idiosyncratic. According to the authors of Stephen G. Cecchetti and Kermit L. Schoenholt's book, Money, Banking, Financial Markets, “Risk is everywhere. It comes in many forms and almost anywhere imaginable. All risks can be classified into one of two groups: (1) those that affect a small number of people but no one else (unique or idiosyncratic risks) and (2) those that affect everyone (systematic risks or on the scale of the economy) (ch.5 p. 110).” The main objective of this article is to study systematic and idiosyncratic risks, the causes of their occurrence and how they can be eliminated if possible. What are the risks? Systematic risk or economy-wide risk is considered the worst type of risk. as it cannot be avoided and it can also be very damaging to governments, businesses and households, making it much more difficult to recover losses. There are also “macroeconomic factors, such as fluctuations in consumer and business confidence caused by global economic conditions or changes in the political climate. Because history tells us that when oil prices rise, automobile sales fall and the automobile industry suffers (ch.5 p.111).” Another famous example of economy-wide risks is the housing bubble crisis. In 2008, the economy experienced a recession that left thousands of people with foreclosed homes and homelessness. Many people also lost their jobs and savings due to lost corporate profits, pushing the unemployment rate to 10 percent. Some companies, like Lehman Brothers, could not withstand the slowing economy. Forbes magazine author Steve Schaefer's article The Great...... middle of paper ...... measuring risk is a lesson we can all learn and use in our daily financial dealings . Although you cannot avoid systematic, economy-wide risks because it happens to all businesses, government, and households, we can reduce personal risks or idiosyncratic risks by spreading risks simply by not not keeping “all eggs in one basket” (ch.5 p. 112).” I think the U.S. government should take precautions to ensure that systematic risks are not lethal to society. References Schaefer, Steve (2011). The Greatest Bankruptcies of the Great Recession: Where Are They Now? Forbes.comCecchetti, SG and Schoenholtz, KL (2014). Money, banking and financial markets. New York McGraw-Hill/Irwin. Katz, Ian and Tracer, Zachary and Buhayar, Noah. (2014). Berkshire is expected to face the start of a US review of systemic risks. Bloomberg.com