Category Archives: Terrorism Risk

Terrorism and Political Risk Increase

Companies that operate internationally need to ensure they protect their employees, physical assets and business continuity amid a growing risk of terrorism and political violence around the world.

Civil unrest drove the downgrade of 37 countries in the Aon 2012 Terrorism and Political Violence Map.

Austerity measures and spending cuts in Europe sparked civil unrest, riots, strikes and student protests across Europe, leading to 43 percent of the downgrades in Aon’s analysis. The UK, France, Germany, Italy, Portugal and Spain were all downgraded from low risk to medium risk.

Meanwhile, terrorism remains relevant to the security of businesses, with some 46 percent of all countries assessed possessing the risk of terrorist incident icon, according to Aon.

It notes that the death of Osama bin Laden last year signified the decline of a truly globalized radical Islamist terrorism capability, but regionally active groups continue to be inspired by al-Qaida’s ideology.

While South Asia and the Middle East remain focal points for Islamist terrorist groups, Africa has shown the most dramatic shift in terrorism threat in the last year, Aon says. The ratings of six African countries have been downgraded with Senegal receiving a double downgrade from low to high risk.

In a press release Dr. David Claridge, managing director of Aon Risk Advisory, comments:

“Once again the map highlights the challenges businesses face in ensuring the security and continuity of their global operations. For the first time since the map’s inception, we have recorded significant negative ratings in Western Europe that reflect civil disorder in economies traditionally seen as stable. With further austerity measures still to be imposed and the eurozone crisis only in remission, economic and social degradation are likely to be important drivers of future unrest.†

The Arab Spring also features heavily in Aon’s analysis, both for its contribution to civil unrest and as post-uprising states fail to guarantee local and regional security.

Companies should consider insurance as part of their risk management program, Aon adds.

Check out PC360 for more on this story.

Cyber Attack Targets U.S. Water Utility?

Is it possible that a remote cyber attack from Russia caused a pump to fail at an Illinois water utility? That’s the theory put forward by cyber security experts  cited in  numerous media reports.

The Federal Bureau of Investigation (FBI) and the U.S. Department of Homeland Security are said to be investigating the matter, but so far have not confirmed the reports.

According to the Washington Post blog Checkpoint Washington, this cyber attack, if confirmed, would be the first to cause physical damage:

Companies and government agencies that rely on the Internet have for years been routine targets of hackers, but most incidents have resulted from attempts to steal information or interrupt the functioning of Web sites. The incident in Springfield, Ill., would mark a departure because it apparently caused physical destruction.†

An article in London’s Daily Telegraph cites cyber security experts saying that the reported attack highlights the risk that hackers can break into what is known as Supervisory Control and Data Acquisition (SCADA) systems.

These are highly specialized computer systems that control critical infrastructure – from water treatment facilities to nuclear reactors, to dams and switches on train lines.

A PC World blog post has more on the potential threat to SCADA systems.

As noted in an I.I.I. paper on terrorism risk published earlier this year, U.S. intelligence officials have suspected a major cyber terrorism attack is increasingly possible.

Ten Years Later

In the course of the last few weeks and months we’ve highlighted a number of reports and updates related to the impact of the September 11 attacks.

Here are a few of our recent 9/11 related blog posts: September 11 Report Card; Mapping Out a Future Anti-Terror Path; Terrorism Risk In Light of Bin Laden Death.

Additional I.I.I. resources on this topic can be found here.  A New York Times special report also has some interesting perspectives on the costs and consequences of 9/11.

As we look to the 10th anniversary of 9/11 this weekend we pause to remember those who lost their lives on that day.

The 9/11 Memorial  in New York City will be dedicated  on Sunday and open to the public on Monday. The website www.911memorial.org  has images and details for planning your visit.

On a separate note, the latest edition of Cavalcade of Risk,  which features  relevant and timely blog posts on a variety of risk management and insurance topics, is hosted this week by our friends over at Risk Management Monitor.

September 11 Report Card

A decade after September 11, the nation is not yet prepared for a truly catastrophic disaster, according to a new report by the Bipartisan Policy Center.

The assessment from former members of the 9/11 Commission comes  as we approach  the 10th anniversary of 9/11.

According to the report’s analysis:

The 9/11 attacks demonstrated that robust and well-rehearsed emergency response capabilities can be overwhelmed by a significant terrorist attack. In 2005, Hurricane Katrina revealed that a catastrophic natural disaster could produce a chaotic and disorganized response by all levels of government, causing large-scale human suffering. A decade after 9/11, the nation is not yet prepared for a truly catastrophic disaster.†

While the report states that substantial progress has been made post-9/11 in improving homeland security, it highlights a number of areas where more needs to be done.

For example, it says the nation is still highly vulnerable to aviation security threats, noting that the Transportation Security Administration still lacks reliable explosives detection technology and lags in its capability to automatically identify concealed weapons and explosives.

The Washington Post blog Checkpoint Washington has more on the report’s findings.

I.I.I. president Dr. Robert Hartwig discusses the impact of 9/11 on insurers in this video:

Mapping Out A Future Anti-Terror Path

This year marks the 10th anniversary of 9/11 and the cost of terrorism still looms large in United States history.

After close to 10 attack-free years, the $32.5 billion in losses paid out by insurers for the terrorist attack of September 11, 2001, places second in an I.I.I. ranking of the most costly U.S. catastrophes – after just Hurricane Katrina (2005).

As America pauses to reflect on the decade since 9/11, a new book by experts from the RAND Corporation points out that the United States has made many mistakes in its response to the 9/11 attacks and significant attention is needed to correct the nation’s path.

Those errors include overconfidence in rebuilding Afghanistan, launching a war in Iraq that did little to weaken al Qaeda, and many actions that aided jihadist recruiting by fostering resentment toward the U.S., such as the detainee abuse committed at Abu Ghraib prison.

A key insurance-related topic covered by one of the essays in the book is how to compensate victims of terrorism where some early solutions may soon disappear.

In this essay RAND economist Lloyd Dixon and colleagues point out that when the latest extension of the Terrorism Risk Insurance Act of 2002 expires at the end of 2014, the nation will be without a system to fund insurance against losses from terrorist attacks.

The authors suggest that creating a rational compensation system to aid those hurt by terrorism can promote social cohesion and national unity, and contribute significantly to both social and economic resiliency.

“The Long Shadow of 9/11: America’s Response to Terrorism† is available at www.rand.org

As the 10th anniversary of 9/11 approaches, a new I.I.I. video featuring I.I.I. president Dr. Robert Hartwig discusses the impact of the event.

Also check out the recently updated I.I.I. paper “Terrorism Risk: A Reemergent Threat†.

Terrorism Risk In Light Of Bin Laden Death

Though Bin Laden is dead, al-Qa’ida is not. The terrorists almost certainly will attempt to avenge him, and we must – and will – remain vigilant and resolute.†

This excerpt from a memo to employees by Leon Panetta, director of the Central Intelligence Agency (CIA), underscores the point that while the killing of Osama Bin Laden is a positive development in the war on terrorism, the threat continues to evolve.

Insurers, among other industries, must remain alert to the possibility of reprisal attacks.

A recently updated Insurance Information Institute (I.I.I.) paper explains why terrorism risk remains extremely problematic from the insurance standpoint.

It also discusses the importance of the terrorism risk insurance program – a public-private risk sharing partnership that since 2002 has allowed the federal government and the insurance industry to share losses in the event of a major terrorist attack.

To learn more about the insurance implications of Bin Laden’s death, check out the video below featuring I.I.I. president Dr. Robert Hartwig speaking from Ground Zero.

An article  by PC360.com has further insurance market reaction to Bin Laden’s death.

Terrorism Risk Update

Yesterday marked the 16-year anniversary of the Oklahoma City bombing  Ã¢â‚¬“ the deadliest terrorist attack on U.S. soil until September 11, 2001.

The April 19, 1995 Oklahoma City bombing in which an explosives-filled truck was detonated outside the Alfred P. Murrah Federal building downtown left 168 dead, hundreds more injured, and still ranks as the ninth worst terrorist attack in terms of insured property losses.

This year also marks the 10-year anniversary of September 11.

A newly updated Insurance Information Institute (I.I.I.) paper notes that nearly a decade later, 9/11 remains the worst terrorist act in terms of fatalities (2,976, excluding the 19 hijackers) and insured property losses (about $23 billion in 2010 dollars).

Today both these terrorist attacks (9/11 and the Oklahoma City bombing) would be covered under the terrorism risk insurance program — a public-private risk sharing partnership that since 2002 has allowed the federal government and the insurance industry to share losses in the event of a major terrorist attack.

The 2007 extension to the terrorism risk insurance program expanded the definition of a certified act of terrorism to eliminate any distinction between domestic or foreign acts of terrorism.

The program is designed to ensure that adequate resources are available for businesses to recover and rebuild if they become the victims of a terrorist attack.

While the Obama Administration has proposed scaling back federal support of the program, the I.I.I. paper cites industry views that the program provides incentive to property/casualty insurers and reinsurers who might not otherwise provide terrorism insurance at current capacity levels or pricing.

Check out further I.I.I. facts and stats on terrorism risk.

Terrorism Threat Undiminished

The breaking news that a bomb was found this morning on a subway train in Rome, Italy, is the latest reminder that terrorism risk is a constant and reemerging threat.

It follows a suicide bombing attempt in Stockholm, Sweden a few weeks ago and a car bomb plot at a Christmas tree lighting event in Portland, Oregon, the day after Thanksgiving.

Next year marks the 10th anniversary of 9/11 and the cost of terrorism still looms large in United States history.

It’s worth noting that after more than nine attack-free years, the $32.5 billion in losses paid out by insurers for the terrorist attack of September 11, 2001, places second in an I.I.I. ranking of the most costly U.S. catastrophes – after just Hurricane Katrina (2005).

According to a story today on NPR, human error is a key reason for the failure of a number of high-profile terrorist attacks in the course of the past year.

NPR quotes Phillip Mudd, a former CIA and FBI terrorism specialist saying that the U.S. shouldn’t take any solace in the fact that plots launched in 2010 fell flat:

“I’m not sure why so many of them are failing, but I don’t think we should take that as success. One of these kids is going to succeed.†

Meanwhile, an article in the Wall Street Journal reports on an antiterrorism training exercise conducted by the New York Police Department in December.

The WSJ says the simulation of attacks included a series of bombings and gun attacks and was structured to mirror the November 2008 Mumbai attacks in India, when in the course of a few minutes, 10 gunmen attacked various locations in the city.

Check out an Insurance Information Institute (I.I.I.) report for more information on why terrorism risk is likely to remain a serious threat in the decade ahead.

Also check out the I.I.I. backgrounder on terrorism risk and insurance.

Terrorism Risk Index Flags Countries Most At Risk

Somalia is now more at risk from terrorist attacks than Iraq, Pakistan, Afghanistan and Colombia, according to a global ranking developed by risks advisory firm Maplecroft.

It shows that Somalia moved from 4 to 1 in this year’s Terrorism Risk Index (TRI) and has the highest number of deaths from terrorism per population, surpassing Iraq and Afghanistan in the number of fatalities per terrorist attack.

According to Maplecroft’s analysis, Somalia experienced 556 terrorist incidents, killing a total of 1,437 people and wounding 3,408 between June 2009 and June 2010.

Yemen has also jumped into the extreme risk category for the first time. The country has seen a very significant increase in the number of terrorist incidents on its own soil with a total of 109 attacks between June 2009 and June 2010, Maplecroft reports.

A recent incident in which two parcel bombs sent from the Yemen were discovered aboard cargo planes en route to the U.S. minutes before detonation, highlights the elevated risk given this country by Maplecroft.

The index ranks the U.S. (33) at higher risk for a terrorist attack than France (44) and the United Kingdom (46), though none of the major Western economies fall within the high or extreme risk bracket.

Greece saw the largest jump in rankings from 57 to 24, overtaking Spain (27) to become the European country most at risk from terrorist attacks.

Check out a recent I.I.I. paper for more information on why terrorism risk is likely to remain a serious threat in the decade ahead and I.I.I. facts and stats on terrorism.

Terrorism Risk: Reemerging Threat

Today brings yet more headlines underscoring the fact that terrorism risk is a constant and reemerging threat.

An Associated Press report quotes French Interior Ministry officials saying that one of two mail bombs sent from Yemen last week was disarmed just 17 minutes before it was set to explode.

Last Friday two parcel bombs aboard cargo planes en route to the United States were intercepted in England and the United Arab Emirates.

This is the latest reminder that terrorists continue to look for opportunities to target international aviation.

An Insurance Information Institute (I.I.I.) report published earlier this year noted that the cost of terrorism still looms large in United States history.

After nine attack-free years, the $32.5 billion in losses paid out by insurers for the terrorist attack of September 11, 2001, places second in an I.I.I. ranking of the most costly U.S. catastrophes – after just Hurricane Katrina (2005).

Nearly 10 years on, 9/11 also remains the worst terrorist act in terms of fatalities and insured property losses.

Check out the I.I.I. paper for more information on why terrorism risk is likely to remain a serious threat in the decade ahead and why changes to the federal terrorism risk insurance program would have a detrimental impact on the availability and affordability of terrorism insurance.