# Systematic Risk Management ⎊ Area ⎊ Resource 2

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## What is the System of Systematic Risk Management?

Systematic risk management involves identifying and mitigating risks that originate from external macroeconomic or broad market factors, rather than specific asset or issuer risks. This type of risk cannot be eliminated through diversification within a single asset class because it affects all assets within the system simultaneously. For cryptocurrency derivatives, systematic risk includes market-wide crashes, changes in regulatory policy, and a loss of faith in the overall ecosystem.

## What is the Exposure of Systematic Risk Management?

Managing systematic risk exposure requires analyzing portfolio sensitivity to general market movements. While options provide tools for hedging against specific price movements, true systematic risk requires strategies that transcend individual asset performance. Traders seek to minimize this exposure through diversification across different blockchains or by holding assets uncorrelated with the crypto market.

## What is the Diversification of Systematic Risk Management?

Diversification is key to mitigating systematic risk, though it is challenging in highly correlated cryptocurrency markets. Strategies include investing in assets with low correlation to major coins or utilizing derivatives to hedge against overall market downturns. The goal is to create a portfolio that performs differently from the broader market during systemic stress events.


---

## [Institutional Investor Adoption](https://term.greeks.live/term/institutional-investor-adoption/)

## [Quantitative Trading Techniques](https://term.greeks.live/term/quantitative-trading-techniques/)

## [Fixed-Strike Asian Options](https://term.greeks.live/definition/fixed-strike-asian-options/)

## [Institutional Capital Allocation](https://term.greeks.live/term/institutional-capital-allocation/)

## [Option Order Book Data](https://term.greeks.live/term/option-order-book-data/)

## [Options Trading Best Practices](https://term.greeks.live/term/options-trading-best-practices/)

## [Dynamic Analysis Techniques](https://term.greeks.live/term/dynamic-analysis-techniques/)

## [Growth Stock Analysis](https://term.greeks.live/term/growth-stock-analysis/)

---

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**Original URL:** https://term.greeks.live/area/systematic-risk-management/resource/2/