Global Perspective on Terrorism Risk Reflects the 'New' Al Qaeda, with
Likelihood of Smaller, More Frequent Attacks
NEWARK, Calif., Sept. 9 /PRNewswire/ -- The latest and most comprehensive
view of the evolving terrorism risk facing the U.S. -- reflecting a pressured
but still lethal Al Qaeda and the likelihood of smaller scale attacks against
"soft" targets -- has been incorporated into a new version of the RMS(TM) U.S.
Terrorism Risk Model. RMS, the world's leading provider of products and
services for the management of catastrophe risk, introduced the model update
on September 4 at a conference in New York attended by insurance industry
executives and risk managers.
Risk estimates in the updated RMS model reflect the latest analysis of
terrorist group capabilities, targeting strategies, counter-terrorism
measures, and physical modeling of attack mechanisms. In addition to the work
of its internal team of researchers and modelers, RMS received input from more
than 25 outside specialists in terrorism risk who acted as consultants or
reviewers in the course of the model's development.
In the updated model, Al Qaeda remains the primary threat, but the group
is recognized to be undergoing a rapid evolution in response to the U.S.-led
global hunt. According to Dr. Rohan Gunaratna, head of terrorism research at
the Institute of Defense and Strategic Studies in Singapore and a leading
expert on Al Qaeda, the group is refreshing its capabilities by turning to
regional groups that share its ideology and by adapting its operational and
support activities.
Al Qaeda's adaptive measures, along with stronger U.S. and global
counter-terrorism efforts, are creating a "transitional state" for terrorism
risk, said Dr. Bruce Hoffman, vice president for external affairs and director
of RAND in Washington, D.C. This period likely will be marked by smaller scale
attacks against more accessible economic and commercial targets.
The RMS model incorporates this analysis of recent changes in the
terrorism landscape. "Compared with previous estimates released in September
2002, our updated model indicates a smaller probability of a spectacular Al
Qaeda attack succeeding in the U.S. in the coming year," said Dr. Gordon Woo,
chief architect of the RMS model. "Target prioritization in the model also has
shifted, reflecting the process known as target substitution -- as terrorists
move their focus away from well-protected government and military sites toward
softer commercial sites and infrastructure targets such as bridges, rail
stations, and gas stations."
Recognizing the highly dynamic nature of terrorism risk, RMS has added a
new capability to its model, allowing risk managers to carry out sensitivity
studies based on different underlying assumptions. The new model supports
multiple risk outlooks, including an expected outlook based on the current
consensus view of the terrorism threat, as well as alternative outlooks
reflecting plausible changes to the terrorism environment that could increase
or decrease risk.
For example, the expected RMS risk outlook shows only a remote chance that
groups such as Al Qaeda could acquire chemical, biological, radiological, or
nuclear (CBRN) capabilities in the near future. According to Pete Baxter,
director of global consultancy operations at Jane's Information Group, the
more stringent security environment that has developed since the Sept. 11,
2001 attacks has made terrorist groups more likely to employ conventional
weapons and attack modes. However, there is evidence that Al Qaeda seeks to
obtain CBRN weapons, and would use them if available. The RMS model allows
risk managers to analyze the financial implications of this potential
development using an alternative risk outlook that assumes terrorist access to
CBRN weapons.
The RMS model includes the full set of analytical capabilities required to
support terrorism risk management for companies providing insurance coverage
in the U.S. It provides a fully probabilistic quantification of terrorism risk
in the U.S. from all foreign and domestic sources, and supports multi-line
risk analysis for property, business interruption, workers compensation, life,
personal accident, and accidental death and dismemberment insurance.
The model also includes integrated functionality for analysis of coverage
provided under the Terrorism Risk Insurance Act (TRIA) of 2002. Users can
analyze risk separately for TRIA-certified and non-certified events, and
losses can be quantified on a gross basis, or net of TRIA recoveries.
In addition to insurer applications, the RMS model is being applied to
support development of public-sector policies to meet the terrorism threat.
Specifically, RAND has adopted the model for use in government applications
and policy research through the RAND Center on Terrorism Risk Management
Policy, said Jack Riley, the center's co-director.
About RMS
Risk Management Solutions is the world's leading provider of products and
services for catastrophe risk management. More than 400 leading insurers,
reinsurers, trading companies, and other financial institutions rely on RMS
models to quantify, manage, and transfer risk. Founded at Stanford University
in 1988, RMS serves clients today from offices in the U.S., Europe, and Japan.
For more information, visit our web site at http://www.rms.com.
RMS, and the RMS logo are trademarks of Risk Management Solutions, Inc.
All other trademarks are property of their respective owners.
SOURCE Risk Management Solutions
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Related links:
http://www.rms.com
CONTACT:
Jim Marren of TorranceCo, New York,
+1-212-521-5210, jmarren@torranceco.com, for Risk Management
Solutions; or Sarah Smith of Risk Management Solutions, London,
+44-20-7256-3815, sarah.smith@rms.com
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