RMS predicts smaller 2007 terrorist attacks, but bigger payload

The level of terrorism risk for 2007 will be similar that for 2006, with a slight reduction in the risk of nuclear attack and a trend toward smaller attacks that pack a bigger punch, according to an A.M. best report of a recent Risk Management Solutions Inc. presentation.The catastrophe modeler RMS recently hosted its fifth annual Terrorism Risk Management Seminar in New York.A.M. Best reports that RMS “reviewed some 25,000 terrorist ‘events,’ or planned attacks successful or not. It found nearly 500 events in the previous 12-month period, vs. just more than 300 events for the current 12-month period.”Some 4,000 people worldwide have been killed in macro-terrorism attacks during the past 12 months, according to Peter Ulrich, the managing director of enterprise risk at RMS. While two-thirds of those killed can be attributed to the Iraq war, the remainder is spread over 25 countries. “Terrorists are getting smarter about their targeting,” A.M. Best quotes Ulrich as saying.Ulrich notes that U.S. security measures have thus far been up to the task of thwarting terrorist acts. “Since 9/11, there are at least 12 planned attacks in New York City that have been averted,” he said.But terrorists are becoming smarter, better trained and more focused on creating the biggest impact with the smallest effort, said Andrew Coburn, vice president of catastrophe research and director of terrorism research at RMS. “We have seen an increase in the number of people killed, even though there have been fewer attacks,” Coburn said. “They are getting better at doing this. We’re actually seeing a record number of people killed with smaller bombs.”The average annual loss from terrorism for the industry has decreased a combined 3%, Coburn said. That’s a 2% decrease in property insurance and a 4% decrease in workers’ compensation.RMS has added new attack modes to its 2007 risk model: sabotage of hazardous materials in transit; small-scale poison attacks; and heavier casualty rates for bio-terrorism involving anthrax. The model also outlines the worst-case location for the release of chlorine, citing Washington, D.C. RMS will release the new model on June 5.