We use both, and yeah, the Institutional key really should be a closely guarded secret. Only a couple of people in our organization actually have the password for it. I'm one of 2. I've rarely needed it, but on the few occasions I needed to unlock a Mac that for some reason did not have an Individual Recovery key on file, or otherwise wasn't working, the Institutional key did the trick.
But you're correct, it does represent a security risk, so measures need to be taken to control access to it. In those cases where it was needed, we've needed the affected Mac shipped to me, sometimes from outside the country or from another state, because I will absolutely not give the password to any of our techs, under no circumstances.
Also important to keep in mind is that access to the key itself is only part of the equation. Without the password that was used to generate the key, one can't create an unlock keychain to use on a machine. If you protect access to both, you should be ok.
