Risk Management Strategy on Financial Performance of Micro Finance Institutions in Uganda: A Case of Rushere Savings and Credit Cooperative Organization in Kiruhura District

Microfinance institutions (MFIs) play a crucial role in promoting international and local development goals, especially in the context of poverty reduction, economic empowerment, and financial inclusion. MFIs provide financial services, such as microloans and savings accounts, to low-income individuals and small businesses. These services are intended to help people lift themselves out of poverty by providing access to capital for income generating activities. Many of the United Nations' Sustainable Development Goals, such as no poverty, zero hunger, and gender equality, can be furthered through the work of MFIs. However, it's essential to note that the impact of MFIs varies depending on the specific institution, its approach, and the regulatory environment in which it operates. While microfinance has the potential to be a powerful tool for development, it is not a panacea and must be implemented effectively to achieve the desired outcomes. Consequently, MFIs face various risks in their operations, which impact their financial stability and ability to achieve their social and economic development goals. To manage these risks effectively, MFIs need to implement robust risk management strategies. The specific objective of carrying out this study was to examine the extent to which risk management influences the financial performance of Rushere Savings and Credit Cooperative Organization in Kiruhura Uganda. The research questions focused on risk assessment, diversification of portfolio, credit risk management, member education, technology risk management, and insurance risk coverage. This study was based on a quantitative research approach. The study was underpinned by the modern portfolio theory. A descriptive research design was used to obtain the responses that were later statistically described in quantified formats. The study considered a target population of 160 people from which a sample size of 127 respondents was selected for this study. Both Stratified proportionate sampling and simple random sampling techniques were used to select individual respondents in their strata. Structured self-administered questionnaires were used for primary data collection. Data was analyzed by the use of inferential statistics with the aid of Statistical Package for Social Scientists (SPSS) version 24.0. The study established a significant positive relationship between risk management and financial performance (β1=-124, p=0.000<0.05). The study concluded that there is a strong positive relationship between risk management and financial performance. The study recommended the implementation of risk management strategies to enhance the performance of SACCOs. Keywords: Risk Management, Performance, Strategy, SACCOs