Andrew Holt looks at how brokers can help businesses adapt to the constantly evolving threat of terrorism
The recent bomb plots in London and Glasgow have thrown into sharper focus once more the issue of terrorism. For the insurance industry the issues primarily centre around a fully understanding of the real risks posed by terrorism and ensuring businesses have the proper business continuity plans in place.
This is not as easy as it would appear, as the nature of the terrorism risk is evolving as the scope and shape of terrorist threats around the world are shifting says the 2007 Aon Terrorism Threat Map.
This means that the vulnerabilities in a company’s operations and revenue streams are also shifting, heightening the importance of fully understanding the changing nature of a business exposure.
The implications for business are significant. “Businesses need to realise that the level and shape of the risk is constantly evolving,” warns Paul Bassett, executive director of Aon Crisis Management. “As the risk profile changes, as parts of the world become more or less vulnerable to attack, the vulnerabilities in a business operations and revenue streams also change.”
Bassett says that as conflicts in the Middle East change and mature we are likely to see more movement of Jihadists between countries, perhaps returning from conflicts to their home nation, which again influences the shape and scope of terrorism risk.
Similar themes were identified by Lloyd’s earlier in the year. The oldest insurance market found that there appears to be a significant gap between risk awareness and an actual understanding of the key terrorism threats.
Lloyd’s showed that many businesses rely on international media coverage to come to a decision on what risks they face. The criticism of this approach is that media coverage tends to focus on radical religious terrorism and rarely touches on the emergence of new risks, such as threats to supply chains, cyber terrorism, home grown terrorism and the threat of chemical, biological, nuclear and radioactive attack. Here, insurance companies, brokers and risk mangers need to reach a high level of understanding to be able to deal with all aspects of the terrorism spectre.
Especially when you consider that over 37% of all companies surveyed – and half of smaller businesses – reported that they had either no continuity plan in place at all or one that does not adequately take account of political violence risks.
It is time brokers stepped up to the terrorism challenge and filled the void.