RMS, a catastrophe modeling firm, has updated its Probabilistic Terrorism Model to incorporate new views of terrorism risk for Canada, Denmark, Ireland, Italy and the United Kingdom.
The RMS terrorism model includes a catalog of more than 90,000 attack scenarios and almost 10,000 terrorism targets, offering insight to the drivers of loss for a portfolio of risk. The model incudes only large-scale events that could threaten the solvency of an insurer or reinsurer; such events have caused minimal insured losses in recent years. The analyses offer a detailed view of the hazard and vulnerability across different types of attacks. The RMS view of attack probability is calibrated based on attack, plot and countersecurity data from open source intelligence.
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The new terrorism model incorporates updates to event frequency that reflect a decline in the frequency of macro-terrorism attacks; a decline in the overall threat of large-scale terrorist attacks, due to weakened al-Qaida operational capabilities and successful counter-terrorism measures; and continued violence and instability in Pakistan, Iraq and Syria, which provide a safe harbor for terrorist operations and recruitment. RMS also has updated the three sets of rates standard, reduced and increased in its model.
“The [terrorism] model provides a granular probabilistic view of terrorism risk to equip underwriters and portfolio managers with an empirically driven method of evaluating terrorism risk, enabling them to manage their exposure, set corporate risk tolerances and assess the relative risk between prospective portfolios,” said Chris Folkman, director, model product management at RMS.
