Terrorism a top risk identified in Chubb Risk Research Report

Recent years have seen an increase in major terrorism events across the world, as attacks in Brussels, London, Madrid, Nigeria, Paris, Tunisia and Turkey have highlighted the growing need for terrorism and political violence cover. It is therefore not surprising that terrorism was identified as the third greatest concern among Africa’s risk management community in Chubb’s latest 2019 Multinational Risk Research Survey.

In this volatile environment, it is important to understand the threat and protect the financial well-being and viability of your business. The main challenge for risk managers currently is how to prepare companies for an increasingly threatening world in which terrorism and political violence are very real and changing threats.  Terrorism is an evolving threat and multinational organisations with growing global exposures have expressed their concern regarding so-called “Black Swan” events, such as the 9/11 terrorist attacks on the United States in 2001.

According to the Chubb risk research survey, ‘New Age’ terrorists have evolved from a suite of predictable attack scenarios into highly innovative organisational networks operating largely unrestrained in an environment of dispersed nodes.  These terrorists indoctrinate discontented, unemployed or underemployed youths, often via social media.  Their actions are underpinned by marked fanaticism, in addition to an indiscriminate hunger for killing and power. They are able to change their course quickly and the primary obstacle is that businesses are not as agile as the threat.

Considering the latest data from the 2016 Global Terrorism Index, the Middle East and North Africa continue to be considered extremely prone to terrorist activity. Only certain pockets of Africa – Botswana, Malawi, Namibia, Zimbabwe – are relatively safe from terrorist threat. It should by no means be seen as an indication of prosperity in these countries, as political violence and poverty remain rife inside their borders. Equally, the ten most economically impacted countries, relative to the size of their economy, are all conflict-affected countries in the Middle East and North Africa, sub-Saharan Africa and South Asia, according to the index.

“Terrorism and political violence are real and constantly evolving risks. The range of risks are growing, from violent attacks that include riots and shootings to arson and large-scale bombings.  Risk managers need to prepare for this increasingly volatile world and ensure they are on top of the insurance solutions available and understand the different types of cover, as well as potential gaps,” says Chris Caalsen, Property & Terrorism Underwriter, Chubb Insurance South Africa.

Plugging the gaps

“Today there is more capacity available in the stand-alone insurance market than ever before, with broader wordings, higher limits and more affordable terms. However, the boundaries between the various terrorism, political violence, business interruption and property covers are complex, and there may be gaps in cover.

“These gaps tend to arise when exposure falls between policies, when an event causes damages, which are difficult to categorise or are defined differently by various authorities,” explains Caalsen.

Given the growing political and terrorism volatility worldwide, there is a critical need for companies to re-evaluate the adequacy of their risk management strategy to ensure as broad a range of perils as possible is covered, thereby reducing any uncertainty and dependency on the classification of an event. Risk managers need to understand exactly what their changing exposures are, what insurance cover they actually have, and what the wordings on these policies mean and where the gaps may lie. Only then can they be sure of the necessary solutions and purchase the right protection to safeguard business operations.

“To minimise gaps and to ensure seamless cover between standard property and political violence exposures, a comprehensive full political violence policy purchased with a conventional all-risk policy will ensure protection against the impact of political violence and instability,” concludes Caalsen.

The Multinational Risk Research Survey released by Chubb Insurance South Africa, in collaboration with Commercial Risk Africa, identifies and assesses the top ten risks facing multinational businesses on the African continent.  The Chubb Multinational Risk Report highlights the key concerns of African risk managers and insurance buyers and draws attention to the trend among risk managers towards managing specialist and emerging exposures within a multinational programme structure.

Conducted during 2018, the Chubb Multinational Risk Research Survey comprises responses from 481 correspondents from key industry sectors in 24 African countries.  To download the full Chubb Multinational Risk Research survey, click here.

About Chubb

Chubb is the world’s largest publicly traded property and casualty insurance company. With operations in 54 countries and territories, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients.  As an underwriting company, we assess, assume and manage risk with insight and discipline. We service and pay our claims fairly and promptly. The company is also defined by its extensive product and service offerings, broad distribution capabilities, exceptional financial strength and local operations globally. Parent company Chubb Limited is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index.

Chubb maintains executive offices in Zurich, New York, London and other locations, and employs approximately 31,000 people worldwide. Additional information can be found at: chubb.com

 

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