If these discussions and the wealth of information accumulated indicate potential problems with an insurer's ability to pay claims, Fahrenthold is prepared to make program changes, reducing a carrier's capacity or eliminating it altogether. Regarding AIG, which has played important positions in both Continental's aviation insurance and directors and officers liability coverage, he is taking a "wait and see" position. "I'm holding off until I know more," he says.

Other risk managers have similar concerns about carrier solvency, despite the fact that the property and casualty industry as a whole is healthy if not vibrant. Although aggregate investment income is down, the industry's conservative approach to investing has helped it to weather the economic climate better than other financial institutions like banks. As yet, no insurers have gone belly up because of the recession, although several, including AIG, XL, Hartford and CNA Financial, have suffered ratings downgrades. Anxieties linger about these insurers' future outlook. "You never know," says Bill McAllister, vice president and manager of the insurance risk department at PNC Financial Services Group, a Pittsburgh-based bank with $7.19 billion in annual revenues.

McAllister blames insurer solvency issues for causing him some sleepless nights. Like Fahrenthold, he is looking to reduce his insurance program risks. "We're questioning whether or not to get in bed with a few companies or reducing their capacity in our programs," he says. To make these decisions, he relies on the usual data from rating agencies like A.M. Best Co. and Standard & Poor's, augmented by information from Alert Research, a business intelligence organization that digs more deeply into insurer financial health. "We've got them on retainer to track some of the carriers we have questions about," McAllister explains. "They do a more proactive review than the rating agencies."

Other risk managers with insurer solvency on their minds also are taking unusual steps to gauge the financial health of carriers. Janice Ochenkowski, managing director and director of risk management at Jones Lang LaSalle, a Chicago-based commercial real estate concern with $2.6 billion in annual revenues, has activated the Google Alert feature on her personal computer to provide timely information on the solvency of several insurers. "We're hearing that many insurers are at risk of a downgrade in the next year," says Ochenkowski, former president of the Risk and Insurance Management Society. "Our concern as risk managers is our ongoing ability to place coverage with these companies with confidence that our long-tail liability risks will be properly insured."

To gain this confidence, she accesses data from all the major rating agencies and schedules in-depth discussions with her insurance brokers about carrier solvency. If an insurer sticks out as questionable, it incurs a smaller placement in the company's insurance programs. Overall, Ochenkowski says the number and capacity contributions of insurers are more diversified than in the past, reflecting her goal to spread corporate risk among more insurers to reduce the impact of any one of them going bankrupt. She's also soliciting and relying on input from senior management and board members in these decisions. "I want them to know my thought processes and strategies and whether or not they agree or disagree with them," she says.

Worries over insurer insolvency are nothing new, with such companies as Kemper and Reliance having declared bankruptcy in the last decade. Yet Carmelo Casella, vice president of corporate insurance at Bank of New York Mellon, says in the 20-plus years he has been buying insurance for the New York-based financial institution with $13.6 billion in annual revenues, he never thought much about insurer solvency. Today, he thinks about it a lot and muses about the consequences. "If AIG or another insurer in our program is insolvent and can't pay a claim, what do you do about it?" Casella says. "I guess you pray. Maybe you just keep your eyes closed and don't read the paper."

He's joking about the latter, noting that each time AIG makes the news–most recently in late February, when the insurer reported its inability to sell off some units to repay the government–he's on the phone immediately to his brokers at Marsh and Aon. "They're telling me the operative word is 'watchful'–not to act prematurely and hasten their demise," Casella says. "Were AIG to be downgraded again, it could be the kiss of death. Many risk managers would be compelled to look elsewhere to transfer exposures, pulling the business now or at the next renewal. It's a strange world."

Aside from insurer solvency issues, the recession has wrung other concerns from risk managers. "I'm spending my time assessing how the financial crisis might devastate my company," says Rick Roberts, corporate risk manager at Ensign-Bickford Industries Inc., a Simsbury, Conn.-based diversified manufacturer of explosives, aerospace equipment and pet feed. "It might be one thing or a combination of events. For example, I'm looking at our key suppliers to ensure their financial condition is secure. Fortunately, we're well diversified and have been around for more than 160 years. Typically, when one part of the business is in a down cycle, the other is up. The question is if this will remain the case in the current environment."

Not all financial exposures created by the recession are insurable. Leesha Heard, until recently the corporate director of risk management at Ameristar Casinos Inc., a Las Vegas-based operator of seven casinos in Nevada that had 2008 revenues of $1.27 billion, says the recession's impact on attendance forced Ameristar to cut back on staff. "I'm worried about service, since we have fewer people to provide the 'high touch' service we had in the past," Heard says. "Even though there are fewer people coming to the casinos, I didn't want them to have a shoddy experience and not come back, which would only make matters worse. I wanted to be sure the food was still top caliber, the place was always clean and safety remained a major consideration. We have repeat customers and I wanted to keep it that way."

The squeeze on capital caused by the financial crisis worries Scott Clark, risk and benefits officer at Miami-Dade County Public Schools in Florida, which has an annual budget of $2.8 billion. "Whether you're a corporate entity or a public entity, the ability to access capital is absolutely paramount," Clark explains.

He's less concerned about the school system's access to capital than he is about the insurance industry's capital needs. "The hot button for property insurers in an area prone to catastrophes is their access to capital, which has dried up and become more expensive," Clark explains. "Given the catastrophic risk of hurricanes in Florida, we are heavily reliant on property insurance to spread this exposure. I'm concerned about insurance availability, coverage gaps and premium hikes if insurers and reinsurers pull out of the state."

The credit crunch is creating significant operational risks for companies like Labor Finders International Inc., a West Palm Beach, Fla.-based temporary staffing firm with $500 million in annual revenues. "That's the big one keeping me up at night," says Wayne Salen, director of risk management. "Commercial paper has become virtually nonexistent for day-to-day needs. We've noticed that accounts receivables are ratcheting down, as companies have difficulty paying their bills. Consequently, we're putting more weight behind evaluating the credit of our customers. In the past, we'd be willing to accommodate late payments. We're not being quite so generous anymore."

There are, of course, other risks that give those empowered to manage them the jitters. Salen cites possible regulatory changes affecting insurance companies and other financial institutions that could force premiums into the stratosphere and thin coverage terms and conditions. Although the property/casualty market is flat at the moment, expectations are for it to harden later this year–"certainly not the best timing given scarce credit and intense cost squeezing by companies," he says.

Dave Hennes, director of risk management at The Toro Co., a Minneapolis-based maker of lawn-care products with 2008 revenues of $1.87 billion, cites both rising insurance premiums and reduced insurance brokerage services as discouraging. "We're all trying to do more with less, and now we have to contend with compensation models in the brokerage industry that have changed dramatically," Hennes says. "We're not getting the same level of support in loss control and claims handling that we had previously. That puts pressure on us to be more accountable in these areas. I'm concerned we could miss something for which we relied on our broker in the past."

Ochenkowski concurs: "Insurers and brokers are looking to increase their revenues and profitability, while cutting back on services. I'm forced to negotiate more aggressively to align costs with services." She and Hennes also mentioned the impact of the global financial crisis on their companies' international business prospects as yet another worrisome issue.

PNC's McAllister, on the other hand, says he's concerned about uninsured risks–situations where an employee makes a decision in the field and unknowingly creates a risk for PNC. "We've hired an individual in the risk management department whose primary responsibility is to make sure the business units understand the key risk management initiatives they must follow and that everyone in that unit is apprised as such," he says.

Other risk managers fret less about insurable exposures and more about strategic risks. Nowell Seaman, manager of risk and insurance services at the University of Saskatchewan in Saskatoon, Canada, is among them. He points to academic excellence as a key strategic risk at the bustling campus of 20,000 students, 5,000 staff members and 10,000 people who work each day at the university's diverse research organizations.

"The insurable risks are generally easier to recognize and measure so I have a greater degree of assurance about them," Seaman says. "It's the strategic risks, such as the need to recruit and retain excellent faculty and others who support our research facilities, that are more challenging, given the variety of external factors affecting them."

He adds, "My job is to manage not just insurable risks but all others that affect our strategic priorities, cause us to change our business model or threaten our survival. That's what keeps me awake at night."

Sleep better, risk managers. Tomorrow is another day.