December 7th, 2012

The Changing Terrorist Threat

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President

The global terrorism landscape, and the threat posed by fundamentalist Islamic terrorists in particular, has changed dramatically since the catastrophic events of September 11, 2001. Before these attacks, al-Qaeda had a well-funded and centralized leadership that enabled it to generally operate under the radar of intelligence agencies and to plan large-scale and spectacular attacks. Since then, military operations in Afghanistan and Pakistan and the killing of several key terrorist operatives have marginalized the core al-Qaeda group. This, coupled with close counter-terrorism collaboration between Western nations, as recently demonstrated by the extradition of Abu Hamza from the United Kingdom to the United States, has prevented al-Qaeda’s core from executing other large-scale attacks on the scale of September 11, 2001.

The threat has consequently shifted to softer targets with attacks and plots becoming more localized. Over recent years, al-Qaeda has expanded its reach by offering support and training to like-minded groups and individuals, facilitating attacks in several regions and countries, including Afghanistan, India, Indonesia, Iraq, North Africa, Pakistan, Saudi Arabia, Spain, the United Kingdom and Yemen. The most significant attacks for (re)insurers following the events of September 11, 2001, have been the Madrid train bombings of 2004, the London transport network attacks in 2005 and the Mumbai shootings of 2008.

Al-Qaeda has also encouraged lone individuals to carry out attacks during this time. Before the attacks of September 11, 2001, intelligence agencies were only aware of one al-Qaeda cell in Europe. Today, they believe hundreds of radical Muslims from
several European countries have traveled to a number of Asian and Middle Eastern countries, including Afghanistan, Iraq, Pakistan, Yemen and Syria, to fight with Islamist militants before returning to their country of origin. The expansive reach of the internet and social media has made it easier for extremist groups to spread their message, recruit new members and incite attacks.

Lone attackers have also been discovered in the United States. Recent unsuccessful attacks in the United States - including the plan to attack a military recruiting station in Seattle; the bombing plot by a U.S. soldier to target fellow troops at a restaurant
in Fort Hood, Texas; the plot to bomb a Christmas tree lighting ceremony in Portland, Oregon and the car bombing attempt in Times Square, New York City - were almost exclusively planned by homegrown operatives, not militants dispatched by core al-Qaeda.  Athough the majority of these homegrown individuals have so far lacked the necessary planning and bomb-making expertise to mount a successful attack, intelligence agencies warn it is almost inevitable that a cell will successfully execute an attack at some point in the future.

Finally, the changing political risk landscape in the Middle East and North Africa, and recent events in Libya and Syria in particular, raise important questions about the future of the international terrorist threat. The political instability in the region has created opportunities for militants to target Western interests, as recently demonstrated by the assassination of the U.S. ambassador to Libya in September 2012. Although the Arab Spring movement has not resulted in an immediate wave of increased terrorist activity against Western countries, security officials warn al-Qaeda-affiliated groups are attempting to exploit power vacuums in these territories to secure a base and obtain new recruits to facilitate future attacks.

For insurers with terrorism risk on their books it is important to understand how the terrorism threat is evolving, the varying risks in different regions and what developments and risks are likely in 2013 and beyond.

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