How to mitigate idiosyncratic risk
Unlike systematic risk, which just happens and must be accepted by investors, idiosyncratic risk can often be mitigated with careful portfolio management. Every company has some idiosyncratic risk, so the first step is knowing what that is and being very honest with yourself about how that may affect the company.
The best ways to mitigate this risk from there are:
Stock variety: If all you buy are real estate investment trust (REIT) stocks, you may have a hard time when the real estate market slumps or interest rates rise. So rather than do that, you want to counter your REIT portfolio with companies that do well in these environments or that aren't generally affected by them much. That might include insurance companies or banks. Further diversifying by choosing these companies in other countries can also help a great deal.
Choosing index funds: Index funds are an ideal choice for balancing a portfolio that lacks diversification. You can choose to invest broadly in a single index, like the S&P 500 or several others, simply by choosing a variety of funds. If you want to invest in fewer companies but remain diversified, mutual funds or exchange-traded funds (ETFs) that track different industries are also a great choice, as long as the industry counterbalances the risk you identified in your portfolio.