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typical investment/project has both a diversifiable and non-diversifiable risk. What do diversifiable and non-diversifiable mean in...

typical investment/project has both a diversifiable and non-diversifiable risk. What do diversifiable and non-diversifiable mean in this context?

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Diversifiable risk is one that can be reduced by investing in other projects. Since one has a number of projects in the portfolio the diversifiable risk would be reduced by adding more projects till it reaches a point of saturation. This risk is also called unsystematic risk and is unique to a particular project.

On the other hand non diversifiable risk is one that cannot be eliminated by including a number of projects. These are market related impacts that tend to impact the overall projects and hence cannot be eliminated.

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