Of the many fundamental questions left unanswered in finance, one relates to corporate risk management practices. My contention in this paper is that managerial habits and organizational inertia play an important role in the decision to purchase corporate insurance and engage in risk management activities. Because public access to corporate insurance purchases and risk management strategies is limited, I examine a particular aspect of the corporate demand for insurance for which public information is available: Directors' and officers' insurance. My results show that some measure of organizational inertia is an important determinant of the demand for insurance. This raises the interesting question of how big of a role does managerial habit and corporate inertia play in the firm's overall risk management strategy?