diff --git a/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopic.java b/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopic.java
index 8377162a7feab..c7bad62171378 100644
--- a/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopic.java
+++ b/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopic.java
@@ -187,13 +187,13 @@ public CompletableFuture<Void> initialize() {
                 }, getPoliciesNotifyThread())
                 // Load the topic's initial policies (global and local) and register the policy listener, so a
                 // non-persistent topic applies its own policies on load, the same as a persistent topic does.
-                .thenCompose(ignore -> initTopicPolicy())
-                // a failure to load the initial topic policies must not fail topic loading.
-                .exceptionally(ex -> {
-                    log.warn().attr("topic", topic).exception(ex)
-                            .log("Error loading topic policies during initialization. Ignoring the failure.");
-                    return null;
-                });
+                .thenCompose(ignore -> initTopicPolicy()
+                        .whenComplete((__, ex) -> {
+                            if (ex != null) {
+                                log.error().attr("topic", topic).exception(ex)
+                                        .log("Failed to initialize topic policies");
+                            }
+                        }));
     }
 
     @Override
diff --git a/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/persistent/PersistentTopic.java b/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/persistent/PersistentTopic.java
index 3c4a404c32c12..b9e4b15da4a04 100644
--- a/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/persistent/PersistentTopic.java
+++ b/pulsar-broker/src/main/java/org/apache/pulsar/broker/service/persistent/PersistentTopic.java
@@ -505,17 +505,17 @@ public CompletableFuture<Void> initialize() {
                     isAllowAutoUpdateSchema = policies.is_allow_auto_update_schema;
                     isAllowAutoUpdateSchemaWithReplicator = policies.is_allow_auto_update_schema_with_replicator;
                 }, getPoliciesNotifyThread())
-                .thenCompose(ignore -> initTopicPolicy())
-                .thenCompose(ignore -> removeOrphanReplicationCursors())
-                .exceptionally(ex -> {
-                    log.warn()
-                            .attr("topic", topic)
-                            .exceptionMessage(ex)
-                            .log("Error loading topic policies during initialization. Ignoring the failure. "
-                                    + "isEncryptionRequired will be set to false.");
-                    isEncryptionRequired = false;
-                    return null;
-                }));
+                .thenCompose(ignore -> initTopicPolicy()
+                        .whenComplete((ignoredPolicy, ex) -> {
+                            if (ex != null) {
+                                log.error()
+                                        .attr("topic", topic)
+                                        .exceptionMessage(ex)
+                                        .log("Failed to initialize topic policies");
+                                isEncryptionRequired = false;
+                            }
+                        }))
+                .thenCompose(ignore -> removeOrphanReplicationCursors()));
     }
 
     private void initializeDispatchRateLimiterIfNeeded() {
diff --git a/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/PersistentTopicTest.java b/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/PersistentTopicTest.java
index 141e3b72897c3..979bef565e0d4 100644
--- a/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/PersistentTopicTest.java
+++ b/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/PersistentTopicTest.java
@@ -261,6 +261,41 @@ public void teardown() throws Exception {
         }
     }
 
+    @Test
+    public void testInitializeFailsWhenTopicPolicyLoadingFails() {
+        RuntimeException failure =
+                new RuntimeException("Failed to load topic policies");
+
+        TopicPoliciesService topicPoliciesService =
+                mock(TopicPoliciesService.class);
+
+        doReturn(CompletableFuture.completedFuture(true))
+                .when(topicPoliciesService)
+                .registerListenerAsync(any(), any());
+
+        doReturn(FutureUtil.failedFuture(failure))
+                .when(topicPoliciesService)
+                .getTopicPoliciesAsync(any(), any());
+
+        doReturn(topicPoliciesService)
+                .when(pulsarTestContext.getPulsarService())
+                .getTopicPoliciesService();
+
+        PersistentTopic topic =
+                new PersistentTopic(
+                        successTopicName,
+                        ledgerMock,
+                        brokerService);
+
+        ExecutionException exception =
+                Assert.expectThrows(
+                        ExecutionException.class,
+                        () -> topic.initialize()
+                                .get(5, TimeUnit.SECONDS));
+
+        assertSame(exception.getCause(), failure);
+    }
+
     @Test
     @SuppressWarnings("unchecked")
     public void testCreateTopic() {
diff --git a/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopicTest.java b/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopicTest.java
index d09f3068c2f09..1c09ba487eff5 100644
--- a/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopicTest.java
+++ b/pulsar-broker/src/test/java/org/apache/pulsar/broker/service/nonpersistent/NonPersistentTopicTest.java
@@ -20,6 +20,7 @@
 
 import static org.testng.Assert.assertEquals;
 import static org.testng.Assert.assertNotNull;
+import static org.testng.Assert.assertSame;
 import static org.testng.Assert.assertThrows;
 import static org.testng.Assert.assertTrue;
 import java.lang.reflect.Field;
@@ -27,6 +28,7 @@
 import java.util.Optional;
 import java.util.UUID;
 import java.util.concurrent.CompletableFuture;
+import java.util.concurrent.ExecutionException;
 import java.util.concurrent.TimeUnit;
 import lombok.Cleanup;
 import org.apache.pulsar.broker.service.AbstractTopic;
@@ -34,6 +36,7 @@
 import org.apache.pulsar.broker.service.PulsarCommandSender;
 import org.apache.pulsar.broker.service.SubscriptionOption;
 import org.apache.pulsar.broker.service.TransportCnx;
+import org.apache.pulsar.broker.service.TopicPoliciesService;
 import org.apache.pulsar.client.admin.PulsarAdminException;
 import org.apache.pulsar.client.api.Consumer;
 import org.apache.pulsar.client.api.Message;
@@ -46,8 +49,10 @@
 import org.apache.pulsar.common.naming.TopicName;
 import org.apache.pulsar.common.policies.data.ClusterPolicies.ClusterUrl;
 import org.apache.pulsar.common.policies.data.TopicStats;
+import org.apache.pulsar.common.util.FutureUtil;
 import org.awaitility.Awaitility;
 import org.mockito.Mockito;
+import org.testng.Assert;
 import org.testng.annotations.AfterMethod;
 import org.testng.annotations.BeforeMethod;
 import org.testng.annotations.Test;
@@ -67,6 +72,45 @@ protected void cleanup() throws Exception {
         super.internalCleanup();
     }
 
+    @Test
+    public void testInitializeFailsWhenTopicPolicyLoadingFails() {
+        RuntimeException failure =
+                new RuntimeException("Failed to load topic policies");
+
+        TopicPoliciesService topicPoliciesService =
+                Mockito.mock(TopicPoliciesService.class);
+
+        Mockito.doReturn(CompletableFuture.completedFuture(true))
+                .when(topicPoliciesService)
+                .registerListenerAsync(
+                        Mockito.any(),
+                        Mockito.any());
+
+        Mockito.doReturn(FutureUtil.failedFuture(failure))
+                .when(topicPoliciesService)
+                .getTopicPoliciesAsync(
+                        Mockito.any(),
+                        Mockito.any());
+
+        Mockito.doReturn(topicPoliciesService)
+                .when(pulsar)
+                .getTopicPoliciesService();
+
+        NonPersistentTopic topic =
+                new NonPersistentTopic(
+                        "non-persistent://prop/ns-abc/"
+                                + "policy-load-failure",
+                        pulsar.getBrokerService());
+
+        ExecutionException exception =
+                Assert.expectThrows(
+                        ExecutionException.class,
+                        () -> topic.initialize()
+                                .get(5, TimeUnit.SECONDS));
+
+        assertSame(exception.getCause(), failure);
+    }
+
     @Test
     public void testAccumulativeStats() throws Exception {
         final String topicName = "non-persistent://prop/ns-abc/aTopic";