This study set out to assess the effect of risk management on the financial performance of Insurance companies of Uganda and in particular AAR Health Services Uganda Ltd. This study was conducted in AAR Health Services Uganda Ltd; located on Plot 16A, Elizabeth Avenue in Kololo, Kampala-Uganda and adopted a case study and design descriptive to narrow down a very broad field of research into one easily researchable topic. Solvent's formula was used to determine the sample size of 107 from the target population of 113 company staff. Quantitative data was collected using close ended questionnaires and qualitative data was gathered using interview guides. The response rate was 82.2% respondents; quantitative data was analyzed using IBM SPSS statistics 22, whereas themes guided the analysis of qualitative data. The study established that Risk management was satisfactory with an average mean of 2.87. Financial performance was rated relatively satisfactory and this is indicated by the overall mean of 2.87. The regression model indicated R value of .753 which implied a positive relation between the financial performance (dependent variable) and Risk management with components of risk identification, risk assessment, risk monitoring & controlling, risk planning, risk maintenance and risk transfer as the (Independent variables). The R2 value representing determinant coefficient was given 0.640 meaning that 64% of the variation of financial performance is the bank is determined by Risk management through risk identification, risk assessment, risk monitoring & controlling, risk planning, risk maintenance and risk transfer but 36% is explained by other factors. The study recommended that management of the insurance companies should manage credit with respect to risk avoidance, risk reduction, risk maintenance and risk distribution to ensure that all element of risk research.miu.ac.ug/publications 94 METROPOLITAN JOURNAL OF BUSINESS & ECONOMICS (MJBE) ISSN 1813-4238 Vol. 2 Issue 5, August - 2023, Pages: 94-119 management are dealt with, the managers of insurance companies should recognize that a holistic approach toward managing business risk has generally been recommended to ensure effective risk management and that when hiring managers, the insurance companies should seek for knowledge, skills, innovation and experience as these were proven key in determining managerial competence and the possession of such qualities improves a manager’s ability to avoid, reduce, maintain or distribute risk in the operations of the insurance companies thus the end result being better financial performance.