Category Archives: Terrorism Risk

Mapping 500 Trillion Dollars of Insured Exposure

RMS has just completed a two-year exercise documenting all the different types of insurance that are available in the market and a classification system for all the assets that they protect. This is published as a data definitions document v1.0 as a standardized schema for insurance companies to have a consistent method of evaluating their exposure.

This project, in collaboration with research partners Centre for Risk Studies at University of Cambridge, and a steering committee of RMS clients, involved extensive interviews with 130 industry specialists and consultation with 38 insurance, analyst, and modeling organizations.

The project will enable insurance companies to monitor and report their exposure across many different classes of insurance, which globally today covers an estimated US$554 trillion of total insured value. The data standard will improve interchanges of data between market players to refine risk transfer to reinsurers and other risk partners, reporting to regulators, and exchanging information for risk co-share, delegated authority, and bordereau activities.

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Downward Counterfactual of the Seattle Suicide Pilot Crash

When hazard events occur, substantial resources are often committed to find out what happened, and investigate the factors that led up to them. Rarely is there a systematic investigation of downward counterfactuals, addressing the question: how could the loss consequences have been more severe?

On October 31, 1999, an Egyptian pilot, Gameel Al-Batouti, deliberately crashed EgyptAir 990 into the Atlantic, en route from JFK to Cairo. Batouti had waited to be alone in the cockpit of the Boeing 767, and had intentionally manouvered the airplane to its destruction, switching off the engines. His last words, repeated several times, were, ‘I trust in Allah’.

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Terrorism Modeling: The Challenges of Keeping One Step Ahead

A version of this article was published by Insurance Day

Terrorism is asymmetric warfare, and terrorism risk analysis entails knowing not only what has occurred in past terrorist campaigns, but also everything that could have occurred. Carl von Clausewitz, the foremost Prussian military theorist, insisted that perfecting the art of warfare entailed knowing not only what had occurred in previous wars, but also everything that could have occurred. The catalog of successful terrorist attacks is only a small subset of the much longer list of terrorist plots, most of which have been interdicted through the diligent surveillance and pre-emptive action of the counter-terrorism forces.

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RMS: Working for the Good of the Game

On November 13, 2015, the multiple terrorist attacks on Paris began with a suicide bomb blast at the 81,000 capacity Stade de France soccer stadium, where France were playing Germany in an international friendly. Soccer is the world’s most popular game, and terrorism is the language of being noticed. When France hosted the FIFA World Cup in 1998, Algerian terrorists planned to attack the opening match in Marseille between England and Tunisia, and follow-up by attacking the U.S. soccer team in their Paris hotel. Fortunately, a mole inside the Algerian terrorist organization passed on intelligence to the French security service, and the plot was disrupted.

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Terrorism Insurance Market: A Mature Approach to Growth

We were delighted to welcome so many representatives of the insurance industry to the RMS Terrorism Risk seminar in New York last month. Our seminar gave us a chance to update (re)insurance risk management professionals on the latest trends in global terrorism threat, its relevance to the insurance industry, and to share some of the latest developments and approaches for managing terrorism risk. Our keynote speakers included Bruce Hoffman from Georgetown University; Jack Riley, Vice President of the National Security Research Division at RAND Corporation, and Steven Simon from Amherst College.

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Terror in Manhattan

After Faizal Shahzad was arrested on May 1, 2010, for attempting to detonate a vehicle bomb in Times Square, Mayor Bloomberg commented, “It’s been said that when you find a terrorist, he’ll have a map of New York City in his back pocket.” A few blocks from Times Square is the Port Authority Bus Terminal, where a pipe bomb explosion occurred at 7.20 a.m. local time on Monday, December 11, 2017, in an underground passage, about 200 feet (60 meters) from the bus terminal.

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Reimagining the WannaCry Cyberattack

On Thursday April 6, 2017, President Trump ordered a Tomahawk missile attack on a Syrian military airfield. This was a direct response to President Assad’s use of sarin gas to attack Syrian dissidents. Just two days later, the password to an encrypted archive of cyber weapons (stolen from the U.S. National Security Agency) was posted by the so-called Shadow Brokers cyber group. This hacking group is thought to have connections with Russia, which is the leading supporter of the Assad regime. They were angered by President Trump’s action.

An immediate beneficiary of this password release was the Lazarus Group, linked with North Korea, which had been launching ransomware attacks at targets over the previous several months. What they lacked was an effective tool to propagate their ransomware from computer to computer. This missing tool, a Microsoft Windows bug called “EternalBlue”, they now were gifted thanks to Shadow Brokers.

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Forecasting Terrorist Attacks

At the start of the RMS Exceedance conference in New Orleans in March this year, I was interviewed for A.M. Best TV on terrorism risk, and specifically asked what I was envisaging for future terrorist attacks.

I replied that terrorists have been thwarted in their ability to produce large explosives for vehicle bombs, and are likely to use vehicles for ramming groups of people. Less than a day later, on March 22, 2017, such an attack took place on Westminster Bridge, London. Over the summer, several other terrorist vehicle ramming attacks have occurred in London, and one in Barcelona.

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Will a Clearer Picture Emerge for Terrorism Insurers?

What a difference a week makes. A week before the tragic events in Manchester, RMS was in New York, and the previous week in London as we hosted over 400 risk professionals from across the (re)insurance industry at two half day terrorism seminars. The seminars featured several of the world’s leading experts on counterterrorism, modeling, and terrorism risk management and highlighted the fluid threat environment, its insurance implications, and the impact of technology on terrorism risk. Continue reading

Recent Attacks Illustrate the Principles of Terrorism Risk Modeling

Some fifteen years after terrorism risk modeling began after 9/11, it is still suggested that the vagaries of human behavior render terrorism risk modeling an impossible challenge, but still the core principles underlying terrorism risk modeling are not widely appreciated. Terrorism risk modeling, as it has developed and evolved from an RMS perspective is unique in being based on solid principles, which are as crucial as the laws of physics are to natural hazard modeling.  The recent high-profile terrorist attacks in London, Stockholm, and Paris adhere to many of these principles.

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