The Future of Crisis Management: A Risk Professional’s Guide to Preparing for and Preventing the Worst
Terrorism treats have evolved over the years. In the past, they involved large orchestrated attacks by known organizations that plotted to cause massive property damage on marquee properties. As terrorist networks disperse, “lone wolves” now focus on soft targets, using hand-held weapons to cause mass casualties. Despite smaller scale events, losses remain extensive.
In this session at RIMS 2021, Fergus Critchley from Willis Towers Watson highlighted three main areas of innovation in which the insurance market has responded.
1. Product Innovation
Insurance coverage has evolved to meet changing trends. Specialty stand-alone terrorism policies provide broader coverage than most government options, such as TRIA, and do not rely on a particular loss quantum or government declaration.
- Coverage is being tailored by territory scope, which provides global coverage options (unlike the country-specific TRIA).
- Businesses no longer need to suffer property damage to incur business interruption coverage. This removes physical loss as a trigger to coverage, replacing it with a violent act at/near an insured location. This is in response to a new interest in coverage to cover political violence – especially in the retail sector.
- With events like mass shootings, there is often not significant property damage, but overwhelming emotional damage. Businesses often want to move their location entirely after such an event. In response, the first form was created for demotion and rebuild, supporting policyholders in their decision to move their businesses and help victims gain closure.
- In response to emerging concerns for cyber threats and bioterrorism, expect related coverage to develop. Risk managers should continuously challenge their broker for updates on the latest cyber terrorism risk transfer solutions and explanations on if these risks are or are not insured in their current program.
2. Crisis Training & Support
There has been a shift in how the terrorism and political violence market views their role in helping policyholders manage a crisis. Historically, this was a traditional role in insuring against monetary loss. However, that has progressed to providing specialty services such as:
- Pre-event education, mitigation training, evaluation and benchmarking.
- Remote e-learning modules for insureds’ workforce, including tabletop exercises.
- Post-loss, 24-hour support provided by crisis response consultants on how to handle the situation, secure the business, and get it operational as soon as possible.
- Advisory services for victims and their families, including psychological care in addition to funeral planning and expense assistance.
- Public relations and media counseling services to help the insured manage reputation.
3. New Developments in Modeling & Analytics
The sophistication of analytics has become an exciting area in the marketplace. This data has influenced advancements in risk identification, assessment and mitigation.
- Geospatial heat map analysis illustrates threats in near real-time.
- Deterministic models combine engineering data to calculate probable maximum losses (PMLs) from specific destinations. This helps pinpoint risk concentrations and identify proximity to other high-valued targets.
- Egress modeling can predict the time it would take to evacuate a building. This is valuable information to inform insureds on interior design and can be used in the insured’s defense should an event result in litigation.