Cat modelling firm RMS has updated its Probabilistic Terrorism Model to incorporate new views of terrorism risk for the UK as well as for Denmark, Ireland, Italy and Canada.

“We have analysed all major global terrorism events in the past decade, as well as changes in the risk landscape for each of the modelled countries, to inform our reference view of the risk,” said Chris Folkman, director, model product management at RMS. “The updated RMS model shows a 15-35% reduction in the overall attack frequency of large-scale events for Copenhagen, Dublin, London, Milan, Montreal and Toronto, Rome, and Vatican City.

Worldwide, the frequency of macro-terrorism attacks is 85 percent lower in 2014 than in 2006, with a marked decrease over the past six years due to reduced terrorist threat and increased counter-terrorism capabilities.”

The enhanced terrorism model incorporates updates to event frequency to reflect the following trends in terrorism:

•Decline in the frequency of macro-terrorism attacks – attacks that result in significant property damage and more than 20 fatalities or more than 50 injuries.

•Decline in the overall threat of large-scale terrorist attacks due to weakened al-Qaida operational capabilities and successful counter-terrorism measures.

•Continued violence and instability in Pakistan, Iraq and Syria, which provide a safe harbour for terrorist operations and recruitment.

“The 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,” Folkman added.

The RMS terrorism model includes a catalogue of more than 90,000 high-resolution attack scenarios and almost 10,000 terrorism targets to provide deep insight into 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. High-resolution analyses provide a detailed view of the hazard and vulnerability across different types of attacks. The RMS view of attack probability is precisely calibrated based on attack, plot and countersecurity data from open source intelligence.

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