Systematic risk is the risk of holding the market portfolio . As the market moves, each individual asset is more or less affected. To the extent that any asset is affected by such general market moves, that asset entails systematic risk.
Specific risk is the risk which is unique to an individual asset.
It represents the component of an asset's volatility which is uncorrelated with general market moves. The notions of specific and systematic risk also arise with risks that are not traded on financial markets. For example, when an insurance company sells homeowners insurance in a particular region, the insurer faces systematic risk from such risks as hurricanes or earth quakes. Such risks can impact many homes simultaneously.