Final answer:
The difference between total risk and residual risk is known as the unsystematic risk or specific risk.
Step-by-step explanation:
The difference between total risk and residual risk is known as the unsystematic risk or specific risk.
Total risk refers to the overall risk associated with an investment, which includes both systematic risk and unsystematic risk. Systematic risk cannot be reduced through diversification and is related to the overall market conditions. On the other hand, unsystematic risk can be minimized by diversification.
Residual risk is the risk that remains after diversification. It specifically relates to the risk associated with a particular investment. Residual risk can be reduced through proper portfolio management and diversification.