Still smarting from unprecedented losses in the wake of the Sept. 11 attacks, insurers are hoping that new terrorism risk models can help them to more accurately write coverage for any such future events.
The new computer simulation models are tapping into the knowledge of counterterrorism, weapons and security experts to yield results that will enable insurers to price such coverage based on likelihood of attack.
A key question being asked of such experts is what the United States can expect from terrorist groups like al-Qaida in the months and years to come. Some of these experts offered opinions at a recent press conference in New York, sponsored by Risk Management Solutions of Newark, Calif.
According to Rohan Gunaratna, a research fellow at the Centre for the Study of Terrorism and Political Violence at the University of St. Andrews, and author of "Inside Al-Qaida," "Al-Qaida has always gone for high prestige, symbolic targets." He emphasized that while the group would prefer to strike at targets inside the United States, it would also attack U.S. interests outside the country as an alternative.
"In a similar way to the flow of water, which seeks the path of least resistance, the flow of al-Qaida activity is towards weapons and targets that present the lowest technical, logistical and security barriers to mission success," according to Gordon Woo, a mathematician who developed a terrorism model for RMS.
Following the high-profile attacks of Sept. 11, Mr. Gunaratna said he expects to see only "medium" and "small" attacks. Larger attacks, he noted, take years of planning across more than one country. The planning for the Sept. 11 attacks, he said, took two years.
"[Al-Qaidas] capability to conduct big operations has diminished" due to having some of its leaders captured and to increased security within the United States, said Mr. Gunaratna. "If the present level of security is maintained, we will not see large-scale operations for the next few years."
Mr. Woo agreed, noting that, "on the one hand, we have al-Qaida's desire to maximize the utility of their attacks, and on the other hand, we have to consider their rational response to stepped-up security and counter-intelligence efforts, and the constraints of their technological and logistical capabilities."
Mr. Gunaratna warned, however, that, "the core of al-Qaida is intact. The group can easily replenish human losses."
Mr. Woo also warned that the United States suffers from a "huge under-funding of homeland security, and that wont go away until there is another major attack."
Hemant Shah, president and CEO of RMS, said that, at the moment, "there are relatively few targets of sufficient utility to an organization like al-Qaida." Nonetheless, he added, "the near-term risk is driven by possible use of conventional weapons."
A likely mode of attack would be a "swarming" scenario in which several targets would be attacked simultaneously in an effort to overwhelm a citys resources, Mr. Shah said. He displayed a map showing some 154 potential terrorist targets in Manhattan.
Speaking of his firms computer modeling of potential terrorist activities, Mr. Shah noted that "there are a lot of uncertainties in the model. There are a lot of assumptions we need to make."
Mr. Woo added, however, that the sophistication of such models will improve over time, and that such models might be useful to the government in prioritizing protection of likely targets.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 14, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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