Standalone Risk

You own a large mining concern: Yours, Mine, and Everyone's. One of your subsidiaries focuses on underwater coal mining...people in diving suits banging on the bottom of the ocean with pickaxes. The insurance rates for this subsidiary are very high, because the work comes with a substantial risk of drowning and shark attack. Not to mention potential pickaxe bounce-back.

However, these dangers represent standalone risks for the underwater operation. At your ground-based subsidiaries (typical mining operations), the shark attack risk is pretty much nil.

There's still the black lung thing and the mine collapse thing. But those dangers represent systematic risks for any miner.

The risks at the underwater division get classified as "standalone," because they're unique to that particular subsidiary. If you close down that company, you get rid of the risk altogether. It only impacts the narrow situation, i.e. it doesn't impact your entire portfolio.