What type of risk is described as affecting only a specific individual?

The correct answer is related to the concept of particular risk. This type of risk is specific to an individual or a particular asset, meaning it does not affect the broader market or group of investors. For instance, if a company experiences a lawsuit or an executive scandal, this situation would pose a particular risk to that company and its investors, but it would not necessarily impact the entire industry or the economy as a whole.

Particular risk can often be mitigated through diversification, as holding a broader array of investments reduces the impact of any single adverse event affecting one specific asset. Thus, understanding this type of risk is crucial for individual investors making decisions about their portfolios.