Financial strategies, plans to increase return--and risk--up to the point (but not beyond) where the protection of core activities may begin to break down, are addressed. The stages for developing a financial strategy are: (1) formulate and examine academic program, research, and marketing strategies; (2) define core activities necessary to maintain the institution with its academic, research, and marketing strategies; (3) measure the levels of risk created by these internal, nonfinancial strategies and by external forces; (4) measure the levels of buffers like financial reserves available to protect core activities from risk; and (5) trade off the requirements to increase buffers against the need for additional nonfinancial resources necessary to accomplish core strategies. The role of the financial manager is one of monitoring risk and resource levels and participating in the trade off between the need to build buffers and the need to build other resources. With the prospect of increasing financial stringency in U.S. institutions of higher education has come the necessity of acknowledging changing levels of risk. Financial management must be better integrated into strategic planning for institutions of higher education to be able to cope with the uncertainties of the 1980s. The risks that an institution faces are changing constantly, and financial strategies that were once appropriate may no longer be best for achieving goals while minimizing threat to core activities. Institutions must monitor financial and nonfinancial resources and three aspects of risk: expectations, preparation, and tolerance. (SW)