RAND and Risk Management Solutions Form Strategic Alliance to Study Terrorism Risk and Compensation

Collaboration Will Include the Creation of a Research Center at RAND

Newark, Calif. – December 12, 2002 – RAND and Risk Management Solutions (RMS) today announced they have formed a partnership to create a research center at RAND to study the risk of terrorism and how to compensate victims of terrorism.

The center’s goal will be to support more informed public policy decisions on how to manage terrorism risk and provide for adequate and equitable risk sharing and compensation of those affected by terrorist acts.

The center will pursue a research program to understand terrorism risk using mathematical models and other advanced techniques. The strategic partnership announced today signals the commencement of the first project of the collaboration and an initiative to establish a three-year agenda for a research center.

Research from the new center will be disseminated through a series of peer-reviewed publications as well as lectures, conferences, briefings to policymakers, and testimony to government agencies, legislatures, and other parties. RAND and RMS will work closely to pursue these initiatives, with RMS providing terrorism risk modeling for RAND’s use as a core research tool. RMS – based in Newark, CA – is the world’s leading provider of products and services for catastrophe risk management.

RAND has been in the forefront of research and analysis on terrorism for three decades, including investigating the origins, development, and implications of terrorism; developing a body of theory spanning its various and disparate elements; tracking terrorist acts in a comprehensive database; and examining the policy options for response to terrorism that are available to democratic governments and the private sector.

“The center will provide policymakers with tools and insights to manage terrorism risk, and design policies and programs for compensation to victims of terrorism,” said Robert Reville, director of the RAND Institute for Civil Justice. “The projects we are planning for the center complement an enormous amount of research at RAND on homeland security and counterterrorism.”

“RMS has been a leader for years in the development of mathematical models for assessing catastrophic risks,” said Jack Riley, director of RAND’s Public Safety and Justice program. “With our input, RMS has recently extended its capabilities to include the probabilistic modeling of terrorism risk using a highly innovative approach based upon the application of game theory. Going forward, we are excited to apply these models to a variety of research applications.”

“Since the release of our terrorism risk model in September 2002, we have been focused on meeting the needs of our clients in the insurance and financial services sectors, assisting them to price their policies and manage their accumulations of risk,” said Hemant Shah, president and chief executive officer of RMS. “The issue of terrorism, however, transcends the concerns of any single industry. By furthering our collaboration with RAND, and by using our models to support the center’s research agenda, we feel we can make a real contribution to the formation of public policy.”

About RAND

RAND’s Institute for Civil Justice helps make the civil justice system more efficient and equitable by supplying government and private decision makers and the public with the results of objective, empirically based, analytic research.

RAND’s Public Safety and Justice program conducts research and policy analysis on criminal justice, drug policy and public safety issues, including issues related to terrorism and homeland security.