What is a "diversifiable risk" versus a "non-diversifiable risk"?

What is a "diversifiable risk" versus a "non-diversifiable risk"?

Scott Leonard, CFP (President, Leonard Wealth Management, Inc.) gives expert video advice on: How do I determine my "risk profile"?; Is investing in the stock market riskier than other types of investments? and more...

There are two types of risk. There's the traditional form of risk, which is a diversifiable risk, where you can eliminate a risk by owning many securities. A non-diversifiable risk is actually the risks we want to take, since we can't eliminate those risks. Non-diversifiable risks are the risks that give us the returns that we're actually going in and investing. Those are the risks we want to seek out as investors: the non-diversifiable risks.