Terrorism and Political Violence – Are You Prepared?

Last week’s events in France – the arrest on Monday 13 July of four men said to be planning a terrorist act on French military installations, as well as two explosions and the discovery of a third device at a petrochemical plant near Marseille on Tuesday 14 July* – highlights, once again, the persistent threat of terrorism and a new generation of political violence.

Such threats are well documented, indeed well mitigated in some geographies. However, some companies remain unprepared for the wider-reaching impacts of an incident, particularly closer to home. France, for example, has been tightening security around sensitive sites, this week adding factories and sites containing hazardous chemicals to a list that includes schools and places of worship.

Identifying potential targets – and motive – is a complex task; however, a business does not need to be the primary or intended target for it to suffer a terrorist-driven loss. It is therefore important to understand the threat, vulnerabilities, and risks posed (directly and indirectly) to a business and to assess the probability of an event occurring and the impact it would have on the organisation.

• Threat: Something with the intent and/or capability to exploit a vulnerability in an asset.
• Vulnerability: A weakness in an asset that can be exploited.
• Risk: The probability of harmful consequences resulting from interactions between threats and vulnerable assets.

A failure to identify and prepare for all eventualities can result in the risk of loss of life, physical damage to buildings and assets, as well as extensive interruption to commercial operations. Insurance is just one aspect of preparedness, and organisations should be minded to review existing insurance programmes, including any specific terrorism coverage and exclusions, property damage coverage and exclusions, third party liability, employers’ liability, and business interruption (including extensions such as contingent business interruption and denial of access, for example).

While difficult, it is important to understand how terrorism and political violence are defined. Insurance programmes need to be carefully coordinated to avoid coverage gaps or duplication of cover. Standalone terrorism policies, for example, do not cover all forms of political risk.

True preparedness should always be implemented strategically and from senior management down. It should be reviewed and tested periodically as the risk landscape evolves and should detail governance for overall preparedness, management, response, and recovery – the crisis management framework – ensuring alignment of all aspects, including:

• Emergency response planning (personnel safety).
• Business continuity planning.
• Supply chain.
• Security programmes (physical and cyber).
• Insurance.
• PR, communication, and legal response in the event of an incident.

For more information on understanding the evolving threat of terrorism, and mitigation strategies, please contact your local Marsh representative.

*Confirmed by French authorities as an act of criminal intent but the motive of which is yet to be established.