July 31st, 2014

Global Terrorism

Posted at 1:00 AM ET

The global terrorism landscape has changed considerably since the September 11, 2001 attacks. During this time, improved intelligence and counter-terrorism operations around the world have weakened the threat posed to the West by the core al-Qaeda group. Military operations in Afghanistan and Pakistan and the killing of several key terrorist operatives, including Osama bin Laden, have marginalized al-Qaeda and its affiliates and prevented other spectacular attacks on the scale of September 11, 2001.

The threat from Islamic militants has consequently shifted to softer targets with attacks and plots becoming more localized as senior al-Qaeda leaders have increasingly called on individuals to execute unsophisticated attacks in their home countries and regions. A heightened focus on inflicting civilian casualties and the targeting of “un-Islamic” assets such as government buildings and personnel and nightclubs has resulted. This trend has been reflected in developments over the last 18 months as individuals and cells inspired by al-Qaeda carried out relatively low capability but high profile attacks in several cities around the world. A number of other unsuccessful attacks perpetrated by lone attackers have also taken place.

All of these attacks (realized and attempted) emphasize that the threat from terrorism remains. In addition to the threat from homegrown jihadists, al-Qaeda and its affiliated groups remain committed to launching major terrorist attacks in the West. Core al-Qaeda and its Yemeni affiliate, al-Qaeda in the Arabian Peninsula (AQAP), in particular still aspire to carry out large-scale attacks that could result in significant property damage and high insured losses.

Events in Syria are also causing considerable concern as a number of Western citizens have joined Syrian-linked extremist groups to fight government forces in the country’s civil war. 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. The greatest threat from Syrian-linked extremism is currently likely to come from individuals or cells that have fought in Syria returning to their home countries and launching attacks on their own (or perhaps with the tacit approval of the groups operating in the country). Such individuals are likely to be trained in the use of weapons and explosives.

The volatile landscape in Syria and other Middle Eastern and North African countries raises important questions about the future of the international terrorist threat. The instability in the region has created opportunities for militants to launch attacks and target Western interests.

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 continuing to attempt to exploit power vacuums in these territories to secure a base and obtain new recruits to facilitate future attacks.

Other events such as the recent violent protests in Ukraine, Brazil, Venezuela, Vietnam and Turkey have highlighted some of the limitations of standalone terrorism insurance coverage and resulted in increased demand for political violence cover as companies look for comprehensive protection to ensure that claims are dealt with swiftly and effectively in today’s unpredictable socio-political environment.

For insurers with terrorism-related risks on their books, it is important to understand the threat and how it is evolving, the varying risks in different regions and what developments and risks are likely in 2014 and beyond.

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