Yes that's right. The backing up of the private key and its passphrase is done out of this application.
So if an authority loses access to its private key then they need to generate a new key pair and start over. Of course they will lose access to all the files that are stored in the server and have been encrypted with that key's pair (unless they have already downloaded them and saved then in a different place).
So if an authority loses access to its private key then they need to generate a new key pair and start over. Of course they will lose access to all the files that are stored in the server and have been encrypted with that key's pair (unless they have already downloaded them and saved then in a different place).