- Pricing and telematics lead the charge as insurtech patents jump 40pc
- FCA puts general insurance pricing practices under review
- Volvo and Baidu reach agreement to produce autonomous vehicles
- Cyber and D&O exposures increasingly intertwined, Airmic report finds
- Arch selects Touchstone for cat risk modelling
Forces at war
Written by Deborah Ritchie
Deborah Ritchie looks at developments in the political risk arena following the killing of Osama bin Laden and events in the Middle East
The killing in May of Osama bin Laden might well be considered a victory for the Obama Administration, but does it impact quite so positively the political risk agenda for business? Terrorism risk experts seem to agree that since bin Laden’s key role in recent years has been as a spokesperson and figurehead, that the actual impact on capabilities within Al Qaeda, and thus the risks, is likely to be minimal.
“Bin Laden’s main role in recent years has been to produce public statements that have inspired militants to plot their own attacks with little intervention from core Al Qaeda,” explains Jordan Perry, a political risk analyst at global risks analysis firm Maplecroft. “This ‘DIY’ jihadi ethic can also be seen in the training of thousands of individuals from North America and Europe in Afghan militant training camps who have subsequently returned to their home countries.”
Both factors, he believes, will ensure that the threat posed by bin Laden lives on. “Bin Laden once said ‘think of me as an agenda and inspiration for self-directed action’.”
But the focus must not rest solely on Afghanistan; keeping an eye on other – some unaffiliated – groups is vital. This may include Al Shabab, based in Somalia, for instance, or Al Qaeda in Islamic Maghreb and Yemen. Further, it is not just groups that risk assessors need to look out for – but also for lower level attacks from individuals that associate themselves with a wider ideology.
“Such ‘self-directed action’, unfortunately, will be largely unaffected by his death,” Perry says, adding that bin Laden’s death is likely to only have a minimal impact on affiliated terrorist groups such as Al Qaeda in the Arabian Peninsula (AQAP) and Al Qaeda in the Islamic Maghreb (AQIM), active in the Arabian Peninsula and North Africa respectively.
“These groups operate with significant autonomy and little intervention from Al Qaeda central, and so their activities are unlikely to be considerably harmed,” he says.
Indeed, the swift news of bin Laden’s successor Ayman Al Zawahiri demonstrates a continuity that in turn shows an operational strength in the core of the organisation. “We expect Al Zawahiri to follow the same path, with a continued focus on the US and the West – so advocating attacks on both the ‘far’ enemy of some Western countries and the ‘near’ enemy of regimes Al Qaeda labels apostate, such as the government in Yemen,” says Karlin Younger, global issues analyst at Control Risks.
While she acknowledges the death of bin Laden has a more symbolic than operational impact, she stresses an impact will be felt within Al Qaeda’s fundraising and recruitment. “While capabilities won’t change, Al Zawahiri’s influence is expected to be less,” she explains. In assessing the risk, it is important to separate intention and capability. Younger’s firm advises firms that in the near term the threat is the same in April as it is now – terrorists’ capabilities are consistent.
A recent report from US-based risk advisory RMS notes: “The appointment of Al Zawahiri to replace bin Laden as the leader of Al Qaeda, while expected, has prompted counter terrorism experts to raise their eyebrows. Al Zawahiri’s background seems perfect for an aspiring terrorist leader. He is a highly intelligent Egyptian radical Islamist and a key strategist within the global salafi-jihadi circles. Nevertheless, his reputation as a divisive figure and a poor orator compared to bin Laden makes it difficult for members of Al Qaeda to rally behind him; particularly when the Al Qaeda core is under constant pressure by US counter terrorism efforts.”
At the time of bin Laden’s killing, RMS warned of terrorism plots against US and Western installations such as embassies and military barracks in high terrorism risk areas such as in Afghanistan, Iraq, Pakistan, Somalia, and Yemen. Some of these predictions were vindicated. Indeed their calculation that, in the West, particularly in the US, major terrorism plots were unlikely as such attacks take time to organise and execute. “Terrorist groups such as Al Qaeda are meticulous,” the report continues. ”They are patient and will wait for security to be lowered before mounting a major attack. With the heightened security in Western countries in light of bin Laden’s demise, it is unlikely that a group or an individual will be able to orchestrate a large attack.”
In the long-term, they advise that risk strategists remember that bin Laden was just a cog within the global salafist movement – albeit a large one.
Consequently, they concluded by recommending that their clients model terrorism risk using their standard outlook for 2012 across all the jurisdictions modelled.
The threat of terrorism remains a daily concern for business risk managers. “Islamist terrorist groups continue to pursue a global agenda, illustrated by plots such as Al Qaeda in the Arabian Peninsula’s attempt to bomb cargo planes last October last year as well as internationalising local grievances by attacking targets like Moscow’s Domodedovo airport, which was bombed in January,” says Janusian’s Dr David Claridge.
Afghanistan troop draw-down
The Afghanistan troop draw-down may further endanger stability.
US president Obama’s announcement that 33,000 US troops will be withdrawn from Afghanistan by 2012 means that the number of Western troops in Afghanistan will return to levels existing before the ‘surge’.
The surge followed a reassessment of US strategy towards Afghanistan which had concluded that a more effective counter-insurgency campaign required a much-expanded troop presence.)
Think-tank Chatham House suggests that before the surge, the Taliban had been gradually gaining control of parts of Afghanistan, notably in the South. Senior research fellow on the Asia programme there, Dr Gareth Price explains that while the Taliban are defeated militarily, its numbers continue to rise. “Every misjudged drone attack, or night-raid leads to new recruits. A couple of years ago, the best guesstimates of its strength stood at 8,000-10,000. Now it is thought to number 35,000,“ he says. And the Taliban has a firm support base within Afghanistan
“Osama bin Laden’s death has clearly changed things, enabling the West to claim success in its core objective. Afghanistan’s political importance to the West has declined relative to that of Pakistan.”
Might the Taliban agree to sell out al Qaeda? “The relationship between the two groups is more often defined by the political inclinations of Western observers rather than by any detailed evidence. But, logically, it would seem reasonable to assume that the death of bin Laden and the fact that al Qaeda is based in Pakistan rather than Afghanistan would allow it some leeway to do so,” Price adds.
Middle East uprisings
The uprisings in the Middle East and North Africa have further highlighted the need for risk managers to take a comprehensive approach by assessing exposure to political violence in all its forms.
The beginning of July brought with it news of a warrant issued by the ICC for the arrest of Colonel Gaddafi, which may not impact in a meaningful way on events on the ground but may serve to give greater legitimacy to Nato actions, according to Elizabeth Stephens, head of credit and political risk and JLT Specialty. “It may make it more difficult for Gaddafi to step down if he fears arrest but the potential remains for a deal to be done,” she believes. “Over time, Gaddafi will be forced from power but the longer this takes the more challenging reconstruction will be, not only in terms of physical infrastructure, but psychologically reuniting the country.
“Turkey’s decision to recognise the opposition National Transitional Council (NTC) as the legitimate representative of the Libyan people is significant, particularly as Turkey is a Muslim state and its actions can’t be branded as a manifestation of western ‘imperialism’. Were the rebels to be recognised by the international community as the legitimate government of Libya this would reduce the current range of legal challenges for companies wanting to do business with the rebels.”
Further, the disintegration of Yemen may raise the risk of the country being used as a base to plan and stage terrorist attacks in the short to medium term. “It should be noted that increases in terrorist activity resulted in further US and Saudi strikes on targets and will encourage the tribes to rise up against al-Qaeda members and force them from their territory,” she explains.
Pricing for countries that are perceived to be high risk will increase as has occurred with Yemen. Territories including Syria and Yemen are extremely difficult to secure cover for. Underwriters are not writing Libyan risk at present.