August 13th, 2009

Global Terror Update: Terrorism Models

Posted at 12:50 AM ET

global_cover141x141AIR has not implemented major changes to its terrorism model since 2007. In 2008, RMS implemented a number of changes in its Probabilistic Terror Model, PTMv2.7. The latest updates to both AIR and RMS terror models are provided below.

AIR U.S. Terrorism Model

In September 2007, AIR, updated its damage functions to include the impact of reflected pressure waves following a conventional bomb blast - following two years of research. Earlier models had only taken account of incident pressure waves. Reflected pressure is always greater than incident pressure by a factor of up to 13X, depending on the density of the area in question. In general, this change to include reflective forces has lead to an increase in projected property losses by city.

The update to blast building damage functions is also reflected in enhanced injury severity distributions in AIR’s workers compensation model. AIR examined research data from the medical community on the issue of trauma arising from terrorist bomb blasts. The updated model has a mixed effect on loss estimates by city, producing significant to moderate decreases in some locations or slight increases in others.

In 2008, AIR did not implement any significant changes to the Terrorism model. Medical cost severities and wages were brought to current levels using regional trending.

RMS U.S. Probabilistic Terrorism Model (PTM) and Global Terrorism Risk Model Targets

RMS implemented updates to the following aspects of the US model (PTM) last year: Target Database, VRG Footprints, Attack Likelihoods, and Building Vulnerability. The target database was updated to include 98 new targets, including chemical plants, government buildings, and convention and entertainment centers. To account for the added targets, the number of potential attacks has also increased and some existing attack footprints have been repositioned.

The PTM v2.7 reflects new attack multiplicity assumptions and changes to attack type likelihoods. Small scale attacks, such as vehicle bombs, have increased in likelihood and multiplicity, while likelihood and multiplicity of larger scale NBCR attacks remains low.

The combined effect of all changes incorporated into the PTM has increased annual loss for property. For workers compensation, increased fatality rates from certain attack types have lowered losses across all return periods; however, updates to the by state cost severities reduces the effects of the model changes and average annual loss is ultimately flat to slightly increased.

The Global Terrorism Risk Model (GTRM) was re-parameterized, based on the global terrorism landscape. Changes were made on a country to country basis, based on individual threats.

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