Financial market risk-risk in retirement, Confused only, allocation, insurance, primary

Howd

Reading 19-lifetime financial advice:Human capital, asset allocation and life insurance.

As mentioned Financial market risk is one of the three primary risks destroy desire lifestyle in retirement.

While it says "Financial market risk can be redused by modern portfolio theory (diversification)", I am confused here.

I think Financial market risk=system risk, diversification can only reduce unsystem risk.

so why Financial market risk can be redused by modern portfolio theory (diversification)?

Iginla2011

Financial market risk = systematic + unsystematicl risks
Diversification allows eliminating unsystematic risks and, thus, reduces market risk

liangfeng

Thanx guys, The key point is: Financial market risk = systematic + unsystematicl risks

I just want to get through every point in the notes.