The master keys, which are stored securely inside the Crypto Express HSM and 
can never be extracted, are the top-level keys in the key hierarchy.  Your 
application-level keys are stored outside the HSM, encrypted by the master 
keys.  Thus, if the HSM fails, you still have the externally-stored application 
keys, and all you need is to restore the master key into a new HSM card - then, 
all of those application keys will again be usable.
 
There are well-known and well-documented procedures for securely backing up and 
restoring the master keys.  In general, they follow the principles of 
dual-control and split-knowledge.  What this means is that the key value is 
mathematically broken into two or more separate values, such that none of those 
tells you anything at all about the value of the complete key.  You need to 
combine them in order to obtain the complete master key.  In most cases, the 
process that is used is to use "key components", which are sometimes called 
"key parts" - the components must all be exclusive-ored (XORed) together to 
form the master key, and that XOR only takes place inside the secure HSM card.  
Each component is protected by a separate person - a key component custodian - 
who keeps it safely locked up, and who enters it into the HSM when the master 
key must be loaded or restored.  The other key component custodian(s) do the 
same for their components, and the HSM creates the complete master key inside.  
The components can be manually keyed in (typically on the smart card reader of 
a TKE workstation), or they may be stored on electronically-readable media.  
The preferred method with Z and TKE is to have TKE store them on secure smart 
cards, and then read them out of those cards when needed.  With this approach, 
the key components are never outside a secure device in cleartext.
 
Another, similar approach that is sometimes used is to use "key shares" instead 
of components.  The difference is that with components, you must combine ALL of 
the components to form the master key, but with shares you only need a subset.  
This is typically called an m-of-n scheme, where you create n shares of the 
key, but any n of those can be combined to form the complete key.  This means 
that you do not need all of the m key share custodians to be present to load 
the master key - any n of them will do.  Note that Crypto Express does not 
support this for loading the master keys, but I wanted to include it here for 
completeness.

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