The big example of this which springs to mind is business interruption cover - it's ruinously expensive so it's extremely unusual to have the max cover the market might be prepared to offer. It's a pure economic decision.

Usually you'd have to show your homework (offers from insurance companies proving that it really is unaffordable). I totally get the trade-off, and the fact that if the business could not exist if it was properly insured that plenty of companies will simply take their chances.

We also both know that in case something like that does go wrong everybody will be looking for a scapegoat, so for the CEO's own protection it is quite important to play such things by the book, on the off chance the risk one day does materialize.

This has killed quite a few otherwise very viable companies, it is fine to take risks as long as you do so consciously and with full approval of all stakeholders (or at least: a majority of all stakeholders). Interesting effects can result: a smaller investor may demand indemnification, then one by one the others also want that indemnification and ultimately the decision is made that the risk is unacceptable anyway (I've seen this play out), other variations are that one shareholder ends up being bought out because they have a different risk appetite than the others.