What is Industry Risk

This is risk that affects all companies in a certain industry. For e.g. Utility companies are often viewed as relatively low in risk because the utility industry is stable and operates in a predictable environment with relatively little change. In contrast, internet and other technology industries are usually viewed as high in risk because the industry is changing so quickly and unpredictably. The dotcom bubble burst in the 90s affected the valuation of all stocks in that industry.

All stocks within an industry are subject to industry risk.