The current macroeconomic university environment

Many Australian universities are facing significant financial challenges, with a high proportion expected to operate with deficits in the coming years. In 2023, nearly 70% of Australian universities were in deficit, marking a significant financial downturn compared to the pre-COVID-19 years, according to a Universities Australia report. These deficits are largely attributed to factors including stagnant government funding, fluctuations in international student enrolments and increased operating costs due to inflation.

According to the peak body, funding for Commonwealth-supported students since 2020 has decreased by approximately $2 billion. Additionally, revenue from international students, which once helped offset domestic funding shortfalls, has been severely disrupted by the COVID-19 pandemic and caps on international student visas.

Given these financial pressures, it is increasingly important for Australian universities to protect themselves from emerging risks.

Emerging Regulatory Risks

In recent years, western academic institutions have seen an upswing in campus protest activity, which has required those institutions to impose restrictions to ensure the safety of students and persons present on campuses. A sensible approach in some of these areas has been the need for student protestors to give prior notice to ensure that academic institutions can implement measures for safety and security.

These measures aim to balance the right to protest with the need to provide a safe environment for staff and students. However, they also raise concerns about the potential suppression of free speech. The Institute of Public Affairs' Free Speech on Campus Audit 2023 called for external accountability mechanisms for academic institutions. Academic institutions routinely work to delicately balance the protection of free speech with the need for student safety.

A recent incident in the UK serves as a reminder of the balance between these competing interests. In March 2025, the University of Sussex was fined a record £585,000 by the Office for Students (OfS) for failing to uphold freedom of speech and academic freedom. The penalty stemmed from its Trans and Non-Binary Equality Policy Statement, which the OfS determined had a "chilling effect" on lawful expression, particularly gender-critical views. This significant financial penalty, along with the associated legal costs and reputational damage, serves as a warning to institutions about the importance of free speech.

In Australia, while such fines have not yet been imposed, the Tertiary Education Quality and Standards Agency (TEQSA) has the authority to regulate and assure the quality of higher education providers. Their responsibilities include safeguarding the wellbeing of students and staff, as well as protecting freedom of speech and academic freedom.

Increasingly, universities are between a rock and a hard place. On top of the routine procedural, statutory and contractual risks they deal with daily, institutions increasingly must also weigh the risk of freedom of speech regulatory risk against the proper and adequate protection of student safety – two obligations that are often in tension. To effectively manage these and other emerging risks, universities should hold comprehensive and strategically structured insurance policies that reflect the sector’s evolving challenges. Even then, those policies should be monitored and reviewed against the developing risk landscape each year.

Traditional policies and programs may exclude new or unorthodox risks, and some do not account for the regulatory investigation costs, administrative penalties, and liabilities arising from governance decisions. Coverage gaps can leave universities exposed to significant financial and reputational harm. To mitigate these risks, universities should consider bespoke insurance solutions, including tailored policy extensions that address their unique regulatory and operational exposures.

Additional Risks for Australian universities

To stay resilient in a shifting risk landscape, universities should work closely with insurers to shape coverage that reflects their specific needs. Key areas to consider include:

1. Property

Damage to campus buildings, high-value equipment, and rare book collections can carry major financial consequences. Property insurance should be broad enough to cover these critical assets.

2. Cybersecurity

With large volumes of personal, financial, and research data, universities are prime targets for cyberattacks. Cyber insurance is essential to protect sensitive information and maintain operational integrity.

3. Kidnap & ransom

Universities face the risk of kidnap, extortion, or unlawful detention involving staff, students, or researchers, whether on campus, during fieldwork, or while travelling. Kidnap and ransom insurance can support crisis response, cover financial losses, and help ensure the safety of individuals in high-risk situations.

4. Intellectual property

Protecting research, patents, and copyright of university research material is essential. Intellectual property insurance can help manage legal costs and losses from disputes or infringements.

5. Student welfare

Supporting student wellbeing is a core responsibility for universities. Insurance can help cover mental health services, liability for harassment claims, and other safety-related issues.

6. Liability

Universities face significant liability risks, including public liability for injuries to visitors on campus and employer’s liability for staff injuries. Professional indemnity is also a concern, covering errors in educational delivery, such as incorrect exam marking or admissions decisions, and private sector research work which gives rise to questions of coverage as well as possible dual insurance issues between the institution and the private entity.

7. Governance

Universities face risks related to governance, including compliance with regulations, ethical standards, and internal policies. Directors and officers (D&O) liability insurance is essential to protect university leaders against claims arising from decisions and actions taken within their roles.

8. Environmental

Universities face environmental risks stemming from pollution, waste management, and compliance with environmental regulations. Measures should be taken to address these risks, such as managing hazardous waste from laboratories, ensuring proper disposal of chemicals, and maintaining air and water quality standards.

9. Reputation

Scandals, protests, or academic misconduct can severely damage a university's reputation. To manage these risks, universities often have crisis management strategies, which should be supported and underpinned by crisis and reputation protection insurance programs.

10. Operational disruption

Events like pandemics or industrial action can disrupt operations. Business interruption insurance helps manage the financial fallout of these situations.

11. Fieldwork hazards

Travel and fieldwork carry risks, including accidents and exposure to hazardous environments. Travel and liability insurance can help manage these exposures.

How to Practically Address Risks

To practically manage these diverse risks, Australian universities should leverage the expertise of key professionals, including chief risk officers, insurance brokers, lawyers, financial advisers, and accountants. These professionals play a crucial role in identifying potential threats, developing risk management strategies, and ensuring that appropriate insurance coverage is in place.

In-house counsel, group risk teams, and independent legal advisers should regularly conduct risk reviews and audits of institutional activities, processes, and governance to manage ongoing and developing risks to an institution's portfolio. These reviews should align with the annual insurance renewal cycle and involve close coordination with internal or external insurance teams to secure adequate coverage from both Australian and international markets. Given ongoing financial pressures, universities must carefully balance the cost of insurance premiums against the potential impact of future risks, such as data breaches, regulatory penalties, or reputational damage.

Institutions may choose to take measured risks, but that risk appetite must be a shared decision developed collaboratively by executive leadership, general counsel, risk teams, and legal advisers. This internal alignment is key to managing external risks. By working together with brokers and legal experts, institutions can adapt to market shifts and emerging risks more effectively. Legal professionals can also take on an advisory role, helping institutions navigate regulatory obligations and strengthen risk mitigation strategies.

Through this collaborative, cross-functional approach, universities can build robust risk management frameworks that address both financial and operational challenges. This ensures a safer and more resilient academic environment, allowing universities to focus on their core mission of education and research while effectively managing potential risks.