She is perturbed by what she sees as the insurance market's strategic move away from insuring large, complicated risk programs. "It seems insurers are more interested in underwriting small accounts with simpler risk exposures, rather than the complex programs and risks like we face globally," Ochenkowski says. "The pool of available insurers to handle our risks is getting smaller. I am also concerned about insurers' ratings and our ability to meet contractual rating requirements."

Many of the company's contracts with banks, vendors and clients require that its insurers maintain a high-level rating from Standard & Poor's. "With fewer insurers, and some downgrades, it is becoming more difficult to meet those contractual requirements," says Ochenkowski. "Going back to the contracting party for a waiver to the rating requirement may open other areas for renegotiation."

Talk to Dave Hennes about the property and casualty market, and a different experience emerges. "We've got plenty of insurance capacity to draw from for our risks," says the director of risk management at the Toro Co., a Minneapolis-based maker of lawn care products. "Pricing has been relatively soft, and we are not seeing any pressure on our lines of coverage. We have multiple options for all our programs, thanks to industry competition. All in all, not much is keeping me awake this year."

Still, insurers and brokers say there are far too many traps for risk managers to become complacent. As Brian Elowe, managing director in global risk management at broker Marsh, expresses it, "We're concerned that our clients, due to the economy, will trim their risk management expenses and thereby heighten their exposures. Fortunately, the insurance markets have been working in their favor for now, with pricing soft and significant premium increases not on the immediate horizon. We just don't want them to take on additional volatility to save a few dollars when their balance sheets may be fragile."

Robert Hartwig, president of the Insurance Information Institute, agrees the buyer's market for insurance has taken some of the financial sting out of managing risks. But, he reminds risk managers of the cyclicality of the property/casualty market–the specter of a major hurricane, earthquake or flood of litigation can alter the status quo quickly. Regarding the latter, Hartwig notes that there has been "an explosion in employment practices liability claims brought by laid-off employees alleging they were fired because of age, gender or other illegal discrimination."

Hartwig maintains that a resurgent trial bar is increasing the odds of a wide range of litigation being brought against companies. Were insurers to absorb substantial costs for defense and legal outcomes, their losses might encourage much higher insurance premiums.

"The intensity of the trial bar's efforts to erode the tort reforms enacted in the past decade is tremendous," he warns. "Risk managers are so consumed with the financial crisis and the economy that they haven't recognized that the trial bar has been engineering a backdoor comeback. We're seeing attempts to roll back the caps on medical malpractice awards and to make it easier to sue insurers in 'bad faith' lawsuits."

Most risk managers would agree their focus right now is shepherding their organizations through the maze of risks created or enlarged by the recession. "For our business segment, the economy is the biggest issue," says Wayne Salen, director of risk management at Labor Finders International, a large temporary staffing firm in Palm Beach, Fla. "We self-insure our workers compensation risks, which is our second biggest cost here–not surprising since in a given year we'll have a quarter of a million workers. We've historically self-funded this exposure to gain more control over it, but banks are hesitant to provide credit these days. We're weathering the storm thanks to our strong balance sheet and good loss history, but it has been tough going."

Pete Fahrenthold, managing director of risk management at Continental Airlines, also cites credit availability as a concern. "We finance a lot of our aircraft, and would be considered a very leveraged organization," Fahrenthold says. "We're trying to refinance our loan obligations, but the credit markets have been tight and expensive. They're opening up a bit but we'd sure like to see them open further."

The price of fuel is another key consideration. "Historically, when the economy revives, so does fuel pricing, which has been low for a while," he explains. "We're just hoping the increase in economic activity outstrips the anticipated increase in oil prices. While we do some hedging, there are limits to how much we'll bet on the direction oil prices are headed."

Other risk managers like Carmelo Casella at Bank of New York Mellon echo Ochenkowski's worries about insurance protection. "When I talk to brokers or underwriters, not all of them agree which countries require a stand-alone [directors and officers] liability policy," Casella says. "Our D&O policies say 'global,' but I'm told that some countries like Brazil require a separate D&O policy that is purchased in that country. Unfortunately, no one seems sure which other countries require this, which would put our directors and officers at significant risk."

Surveys by brokers, he adds, indicate confusion on the topic. "Two will say a country requires a separate policy, and one will say there is no need," Casella says. "Do I buy the policy just to be safe, given the majority opinion? If I do that, then I run the risk of spending money unnecessarily. Obviously, we want a definitive answer, but it is not yet forthcoming."

Another D&O worry is cost. Although the market has been relatively flat, the recent spike in corporate bankruptcies is expected to increase litigation by creditors against directors and officers. More than 150,000 U.S. companies–approximately one in every 200 American businesses–filed for bankruptcy protection in 2008 and 2009. "When a corporation files for bankruptcy, the D&O risk rises appreciably," says Carol A.N. Zacharias, senior vice president and counsel at insurer ACE Group of Companies. Her colleague Scott Meyer, executive vice president of ACE Professional Risk, comments that, "More than any other cause of litigation against corporate officers and directors, bankruptcy poses the greatest threat of personal financial risk to directors and officers, and the most complicated coverage issues."

Most risk managers, but not all, are chagrined by the lifting of the ban on contingent commissions–compensation provided brokers by insurance companies for the volume of business provided. Five years after regulators in New York and other states forbade the four largest insurance brokerages from accepting the controversial fees, attorneys general in the states have now reversed their positions. The states reasoned that the rules put the brokers on an uneven playing field with other brokers allowed to accept the compensation. "I don't like it," says Fahrenthold. "It creates a situation where the broker's independence and its work on your behalf can be called into question because of the financial incentives provided. There is again a perceived conflict of interest."

Bill McAllister, manager of the insurance risk department at PNC Financial Services Group, raises similar alarms. "How do I know our broker is getting us the best deal, given the financial incentive to pump business to one or two carriers more than others?" he says. "There are hundreds of markets out there looking to provide coverage that may be overlooked." Risk manager Rick Roberts, a board member at RIMS, which expressed dismay over the lifting of the ban, sums up the issue succinctly: "There is a direct conflict of interest when you're collecting money on both sides of the deal."

Brokers like Marsh, which has yet to state if it will accept contingent commissions, are being careful. Yet, Elowe says the increased transparency and disclosure of all forms of brokerage compensation and revenue streams should assure risk managers concerned about conflicts of interest. Casella and Hennes agree their qualms have calmed. "I'm in the camp that believes it's not an issue due to competition," Hennes says.

Labor Finders' Salen is concerned about a proposal by the Obama Administration to tax offshore reinsurance. The proposal, contained in the 2011 White House budget released in February, seeks to generate revenue to offset the federal deficit by denying U.S.-based insurance companies the current deduction they receive for reinsurance premiums ceded to an offshore parent. "I understand the government needs to raise revenue, but it needs to think clearly about unintended consequences," Salen says. "It would lead to capacity constraints that trickle down to affect our ability to insure tough risks, and add to our costs."

Interestingly, some of the issues cited by risk managers last year no longer disturb them. For example, most risk managers now feel that AIG, in its new guise as Chartis, remains a financially stable source of insurance capacity, as do other insurers like Hartford Financial Services and XL Insurance. Insurer solvency, for now, seems to be a back burner issue.

With all the Sturm und Drang of the last two years, risk managers concur that 2010 is a bit of relief. "I'm feeling pretty good right now," confides Janice Chamberlain, director of risk management at Costco Wholesale. "From where I sit, I don't see a lot of burning issues. Rates are generally low, coverages are plentiful, our insurance programs are long-term and stable, and our brokers and management team from the top down have been very supportive."

The veteran risk manager smiles. "You know, I'd love to say 'always and forever,'" Chamberlain says, "but I've been at this too long to rest easy. I'm sure something will come along to ruin my day."