Beginning today, I will be writing to you regularly from a unique perspective regarding risk management, managing claims, and underwriting risks. This perspective comes from 36 years as a multi-line insurance claims professional and insurance risk manager—with a few small twists.

I have a background that includes corporate high-risk management, anti-terror and security consultation, and investigation, which is tied into a variety of life experiences including an appointment as a former adjunct instructor at the Aerospace Department at the State University of New York, where I taught risk management, weather, cockpit systems, and navigation. I also completed stints as a corporate pilot and flight instructor and a two-year term as a Human Rights Commissioner.

New, obscure global risks pose a unique challenge to risk managers, claims professionals, and underwriters. As unlikely as these risks may seem, we will be faced with managing them and dealing with the resulting devastating losses.

These events, experts have found, are occurring with historically high frequency and severity. I will be highlighting one of these risks today and will be detailing others in coming articles, including how to minimize the risk of an occurrence or minimize their loss impact.

The disturbing events in Oslo and Utoya Island—the scenes of a massive bombing, death, and property destruction at the seat of the Norwegian government, and the unforgivable massacring of scores of children and wounding of 90 or so more at the ruling Labor Party Youth Camp—highlight a disturbing worldwide trend: mass murder and property damage by political and religious militants on a scale that is reminiscent of a world war.

This event, as confessed by the suspect, Anders Behring Breivik, is a backlash, against Muslim extremists. His 1,500 page “Manifesto” offers detailed planning and logistics, and is a blueprint for others to carry on a global socio-political “blood feud” where there is no end game.

My European and American law enforcement sources are quite worried that this right-wing extremist reaction will trend into the future with greater frequency and intensity; so am I.

Who will his blueprint for large-scale armed attacks appeal to, what are the consequences, and how do we assess home-grown and foreign terrorism risk from an underwriting, risk management, and claims perspective?

Radicalized right-wing gangs such as Skinhead white supremacists and worldwide neo-Nazi groups will find this blueprint for terror engaging. It highlights in remarkable detail the tactics and logistics for covert strategy, planning, and execution, including the procurement of weapons and bomb-making material. His method to market and promote this blueprint for terror is projected to be far more effective than Timothy McVeigh's Oklahoma City attack in 1995. It also provides insight into the minds and culture of Western society for radical jihadists.

How will the risk be underwritten and managed in the future? Sources report that the European Union is now attempting to hastily organize a joint anti-terror program. But this does not always effectively deal with the real and present danger faced by your insured every day.

The following are some considerations regarding assessing the risk faced by a particular insured; suggestions for risk managers in handling the risks; and elements to be investigated by the claims department should the risk become an event.

In formulating a protection strategy for business centers, hotels, resorts, transportation, and their employees and executives, we should evaluate the nature of all terrorists. They adapt to changing defensive strategies. They conduct surveillance of potential targets and identify their weaknesses. They thrive on targets that suffer terminal routine. They move against businesses that are administratively and logistically unprepared to detect, deter, and prevent an attack.

The peculiar difficulties posed in detection and deterrence also are compounded by the risk that an attack may be launched from within the ranks of the insured's employed staff or by guests and legitimate visitors or seemingly random intruders.

Assessing and protecting against these risks includes forming fundamental principles that result in layered, evolving defenses that consider: administrative policies, procedures, and protocols; the administrative integration of risk management and security departments; and the prolific use of IT and security technology.

Some special areas of consideration are:

Training in anti-terror principles & prevention.
Risk management and security anti-terror protocols.
IT department security compliance.
Software management of critical risk and security data flow (quantitative and qualitative).
Current-generation security cameras with analytics software.
Employee, visitor, and guest screening management and due diligence.
Special-attention areas and items—outdoor perimeter; lobby; parking facilities; non-public access and obscure locales; boiler and machinery; storage area for flammables; and anywhere large groups congregate.
Prolific security patrols by a professionally trained staff.

This short but comprehensive list is meant to provoke thought, discussion, and action regarding the reassessment of this terrible but intensifying risk faced by all of us. We can make the difference and, in most instances, it begins and ends with insurance professionals. We can drive a reluctant insured to create a standard of training, assessment, and protection that creates an acceptable risk and is also in their best interest.

Special Reports /

Managing Unlikely Risks: Terrorism

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