Sound financial management and financial stability are crucially important for universities operating in today's increasingly competitive and turbulent environment. Freedom of action is greatly enhanced if an institution is able to act opportunistically and invest in new initiatives, while healthy financial reserves help buffer the institution against environmental perturbations and unexpected events. In this article, the author compares the Security Index for higher education institutions in England, Wales, Scotland, and Northern Ireland to his Expanded Security Index for the same institutions, using 2004-05 data, and interprets the results in the light of the current student recruitment situation. (Contains 4 figures and 1 table.)