Introduction Every investor seeks to earn a return for every coin committed in an investment. The returns expected from an investment may not always be realised fully. There are some factors that may make it impossible for them to be realised as expected. These factors are referred to as financial risks. A risk is defined as the chance that the actual returns expected by the investor will not be attained. The risk in this case may involve losing part or all of the investment that was made. Many companies are investing a lot of money in coming up with strategies that will be used in managing risks (Brealey, 2006). Risk assessment is done to ascertain the nature of task before deciding the strategy of responding to it. Risk defines the extent to which a selected action fails to give the desired outcome. There are two main types of risks in financial management. That is the systematic risk and unsystematic risk. Systematic risks are normally those risks that a company cannot control and are usually macro in nature. Unsystematic risks are those that the company can deal with as they result from factors the risk management team can control. In this paper, we will discuss the mechanisms used in analyzing and managing systematic and unsystematic risks. It also assesses how these risks affect share prices. Mechanisms for analyzing and managing systematic and unsystematic risks The objective of most investors is to attain the highest returns possible in a given risk class. They try to minimize risks for a given level of expected returns. In stock exchange, the total risk of an investment portfolio can be mitigated via diversifying the investment. This is achieved through purchasing of different financial assets like stocks and bonds from several companies or industries. According to Schwarcz (2008, pp 193-249), this is a good approach but risk can only be reduced to a limited extent since the changes in the overall market conditions have an impact on all stocks and this cannot be eliminated by diversification alone. Total risk, therefore, can be categorised into two major components. The first component shows the asset price movement that culminates from dynamics in the entire market. This is called systematic risk on the return of an investment. The second component results from factors relating to a specific industry. This is known as unsystematic risk. Analysis and management of risks requires one to identify the nature of the risk involved. Systematic risks cannot be diversified since they are beyond the organization’s control. They result from those factors the company cannot control. Systematic risks may culminate from labour strikes, inventions and other related factors. As a result, the company can control them (Brealey, 2006, p12). A financial asset is said to be more desirable for portfolio diversification when its volatility is rarely due to market factors. Systematic risks The main reason why investors should regulate systematic risk is to maximize economic efficiency. Efficiency is one of the main goals of securities laws worldwide. This entails maintaining securities in the assets market and also protects the investors against fraud and similar abuses during the trading of financial assets (Schwarcz, 2008, pp 193-249). There are approaches that can be used to regulate these risks. Tradit