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RMS Releases New Views of Risk for Terrorism
Updated model reflects reduction in large-scale event attack frequency for cities in Canada, Denmark, Ireland, Italy and the United Kingdom
NEWARK, Calif. -
August 20, 2014 -
world's leading catastrophe modeling firm, today announced that it has updated its
Probabilistic Terrorism Model to incorporate new views of terrorism risk for Canada, Denmark,
Ireland, Italy and the United Kingdom. The enhanced terrorism model
incorporates updates to event frequency to reflect the following trends in
Decline in the frequency of macro-terrorism attacks – attacks that result in significant property damage and more than 20 fatalities or more than 50 injuries.
Decline in the overall threat of large-scale terrorist attacks due to weakened al-Qaida operational capabilities and successful counter-terrorism measures.
Continued violence and instability in Pakistan, Iraq and Syria, which provide a safe harbor for terrorist operations and recruitment.
“We have analyzed all major global terrorism events in the past decade, as well as changes in the risk landscape for each of the modeled countries, to inform our reference view of the risk,” said Chris Folkman, director, model product management at RMS. “The updated RMS model shows a 15 to 35 percent reduction in the overall attack frequency of large-scale events for Copenhagen, Dublin, London, Milan, Montreal and Toronto, Rome, and Vatican City. Worldwide, the frequency of macro-terrorism attacks is 85 percent lower in 2014 than in 2006, with a marked decrease over the past six years due to reduced terrorist threat and increased counterterrorism capabilities."
RMS has also updated the three sets of rates – standard, reduced and increased – in its model. The multiple views of risk reflect varying assumptions about the threat-level to enable model-users to respond to rapid changes in the terrorism risk landscape, as well as perform sensitivity tests on prospective portfolios.
“Our terrorism model is recognized by the industry as the leading tool for pricing, underwriting, capital allocation and accumulation management decision-making for terrorism risk,” said Folkman. “The model provides a granular probabilistic view of terrorism risk to equip underwriters and portfolio managers with an empirically-driven method of evaluating terrorism risk, enabling them to manage their exposure, set corporate risk tolerances and assess the relative risk between prospective portfolios.”
The RMS terrorism model includes a catalog of more than 90,000 high-resolution attack scenarios and almost 10,000 terrorism targets to provide deep insight into the drivers of loss for a portfolio of risk. The model incudes only large-scale events that could threaten the solvency of an insurer or reinsurer; such events have caused minimal insured losses in recent years. High-resolution analyses provide a detailed view of the hazard and vulnerability across different types of attacks. The RMS view of attack probability is precisely calibrated based on attack, plot and countersecurity data from open source intelligence.
RMS models and software help financial institutions and public agencies evaluate and manage catastrophe risks throughout the world, promoting resilient societies and a sustainable global economy.
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