Which type of risk affects the overall portfolio more?

Systematic risk is the type of risk that affects the overall portfolio because it encompasses factors that impact the entire market or a significant portion of it. This type of risk is often related to macroeconomic events, such as interest rate changes, political instability, or economic recessions, that cannot be eliminated through diversification. When these systemic events occur, they tend to affect all investments in a portfolio simultaneously, leading to a decrease in the overall performance of the entire portfolio rather than just individual assets.

In contrast, non-systematic risk is specific to a single asset or a small group of assets and can be mitigated through proper diversification. Therefore, while it can affect individual investments, it does not have the same broad impact on the overall portfolio.

Enterprise risk refers more broadly to the risks faced by an organization as a whole, including operational, financial, and strategic risks, while asset-level risk addresses risks associated specifically with individual assets. While these types of risks are important to consider, they do not have the same pervasive effect on the entire portfolio as systematic risk does. This distinction clarifies why systematic risk is critical in assessing the overall risk profile and management of an investment portfolio.