January 31st, 2017

Public Sector Risk Financing Perspectives – Terror Risk: Part III

Posted at 1:00 AM ET

emma-karhan-smEmma Karhan, Managing Director


The (re)insurance industry needs to be more proactive in understanding and defining the boundary and extent of insured loss along with understanding the types of targets that have a higher probability of attack. Data in the Global Terrorism Database (1) identifies small businesses, retailers, tourist attractions and transportation hubs as increasingly likely targets, not iconic targets such as New York’s World Trade Center, in 2001. These smaller and less iconic targets are typically more vulnerable to the evolving type of terrorism attack (marauding arms, small explosives) that, while causing smaller direct physical damage and losses, still have the potential for significant contingent losses.



Historically, natural catastrophes have caused more damage and more loss of life than terror events, however “accustomed” to them society has become. However, the impact that terrorism has on societies is disproportionate to the insured and economic loss. In the United States in 2015, approximately 13,500 people died from guns, while terrorism did not cause any deaths on domestic soil. However, a GALLUP (2) poll in 2015 reported that terrorism is the most important US problem for one in six Americans.

Link to Part I>>

Link to Part II>>

Link to Part IV>>

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1. START’s Global Terrorism Database, University of Maryland.

2. http://www.gallup.com/poll/4909/terrorism-united-states.aspx

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