Terrorism Risk Ready: Benchmarking, Modeling, and Financing
Terrorism remains a significant risk for businesses, with threats to property, operations, and employee safety coming from many sources. Organizations should consider a variety of strategies to assess and manage those risks, according to panelists on Marsh’s June 22 The New Reality of Risk®.
The panel looked at results from Marsh’s upcoming 2016 Terrorism Risk Insurance Report, which highlights trends in terrorism insurance purchasing and pricing. The panel also discussed recent shifts in terrorist tactics, as illustrated by recent attacks in Orlando, Brussels, San Bernardino, and Paris.
“There is a threat posed by international terrorist organizations as well as domestic terrorist groups, single issue groups, and ‘lone wolf’ actors,” said Tarique Nageer, leader of Marsh’s Property Specialized Risk Group. “Incidents that destroy buildings are less common, while acts orchestrated against ‘softer,’ more civilian targets have increased in frequency.”
During the webcast, panelists from Marsh and modeling firm AIR Worldwide discussed:
- The benefits of modeling terrorism risk. Businesses are increasingly recognizing how modeling and other tools can help them to understand and then manage their terrorism risk.
- Best practices for managing workers’ compensation risks related to terrorism. With several high-profile attacks occurring in or near workplaces, businesses should consider terrorism to be a workplace risk. In addition to insurance, effective crisis management planning can help businesses protect employees during and after an attack.
- The benefits of using a captive insurer to manage terrorism risk. Businesses can use captive insurers to access terrorism coverage made available through the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA), the federal terrorism insurance backstop.
- Cyber terrorism risk. The federal government and cyber insurers define “terrorism” in different ways; an act that might fall into the definition of cyber terrorism under an insurance policy may not meet the federal definition. However, cyber insurance policies generally cover a broad range of events, regardless of motive or ideological purpose.