Bubbles of volatility.

For risk managers, legacy and balance sheet issues are rising to the top of their agendas these clays faster than a helium balloon floating through the air.

"Very few companies do adequate clue diligence on legacy issues before engaging in an acquisition or merger," says Steve Arendt, a vice president with ABS Consulting in Knoxville, Tenn.

"With mergers and acquisitions, there are legacy risks that hang over from past practices," adds Stephen Esposito, senior environmental engineer for Jacques Whitford Co. in Dartmouth, Nova Scotia. "As such. when you go into mergers and acquisitions, you need to do so with your eyes open and due diligence."

His recommendations are to make sure you have the right experts involved, investigate the site, review historical information and look at records of spills and incidents.

Look for help from the outside, too. Most of our chemical clients carry environmental reserves related to either their own issues or issues they have accumulated over the years as a result of acquisitions " says Gary Wisniewski, vice president with the Industrial Clients Division of Delta Environmental Consultants in Shoreview, Minn.

"One thing we do is work with clients on risk transfer, helping them use insurance to transfer environmental liability away from a transaction or a reserve to get them off the balance sheet."

This is a relatively new concept, says Wisniewski, and it has gained a lot of interest in recent years, especially since specialty chemical companies have been constantly buying and setting businesses, "After a while, the accumulated liabilities can become a real 'ball and chain' on the balance sheet," he says "In the 1980s and most of the 1990s. insurance companies moved away from insuring environmental liabilities through the use of exclusions. It's only been since about 1998 that they have re-entered this market."

In addition, there has been "a lot of emphasis in the last year on managing chemical reactivity hazards." says Scott Berger, director of the Center for Chemical Process Safety with the American Institute of Chemical Engineers in New York.

"If you don't do a good job of managing these hazards, you won't be in business long." Most of the large chemical companies do a good job here. But companies that handle chemicals or ship chemicals don't always have all the information they need to manage reactivity, he says.

Help is on the way. On March 30 2004, a number of chemical trade associations signed an alliance with OSHA to help educate industries on chemical reactivity hazards.