RMS: Terror Loss Estimate Up 25%
By Michael Ha
NU Online News Service, March 25, 3:45 p.m. EST?A major risk-modeling firm calculates that its average annual loss estimate for potential terrorist attacks on U.S. soil has increased 25 percent this year compared to 2004.[@@]
The Newark, Calif.-based Risk Management Solutions said the 25 percent jump in its loss estimate can be attributed to two factors: a heightened threat level for small-sized terrorist attacks not involving "weapons of mass destruction," as well as the rising cost of workers' compensation claims.
Peter Ulrich, managing director of enterprise risk management at RMS, told National Underwriter that in 2005 there is a "higher expected frequency" of relatively smaller terrorist attacks in the United States.
Such attacks could resemble the train bombings in Madrid, Spain, in March 2004 that killed scores of people and injured more than 1,400. In such scenarios, terrorists are likely to use package bombs or car bombs, and direct financial losses from such events would be smaller compared with the World Trade Center, or weapons of mass destruction- type attacks.
But while the likelihood of smaller terrorist attacks has gone up, RMS said the chances of a $100 billion "mega-event" occurring has declined.
Mr. Ulrich credited this development to the success of the Homeland Security Department in making it more difficult to plan a significant attack or transport weapons across borders. He also cited cooperation of intelligence agencies around the world for the declining likelihood of a mega terrorist attack.
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