Q: Why did Pool Re decide to set up TRAC?
Ed Butler, Head of Risk Analysis at Pool Re:
The terrorist threat has clearly changed over the last 5 to 6 years, with a particular shift since the declaration of the so called Caliphate in 2014. The attack methodologies have also evolved to incorporate tactics different to those which Pool Re had originally been designed for. There has been a shift from targeting property and causing economic damage, towards attacks designed to cause mass casualties, by what was until recently considered unorthodox methods. Pool Re needed to adapt to stay relevant and to do so, it first needed to fully understand the evolving threat landscape. It became clear that it needed to expand its capabilities and to develop the resources that would help the Scheme, its Members and partners better understand current and future risks. Julian Enoizi had recognised this for some time and at a serendipitous meeting we began a dialogue which led to the launch of TRAC.
Q: When did you first become involved in counterterrorism and risk mitigation?
I’ve been involved in counterterrorism, both from an academic and a risk mitigation perspective, since my early twenties. My degree was in International Relations with a focus on terrorism, political violence and counter-insurgency. Later, I received first-hand experience of counterterrorism (CT) operations while patrolling the streets of West Belfast as a young officer in the Royal Green Jackets. “Overall, I spent much of my 24 years in the Special Forces’ community on global and domestic counter-terrorism operations”.
Q: What are the long-term goals for TRAC?
TRAC is just one pillar in Pool Re’s goal of having a more risk-led approach to risk mitigation and resilience. Our aim is to provide a better understanding of the threat, through both qualitative and quantitive analysis, and the provision of data to support our Members and reinsurers in their underwriting needs. Our reporting also has much wider utility for the wider business community, in particular those who buy, or should buy, terrorism cover – we are looking to consistently build on this. Pool Re has a role to play in risk mitigation and TRAC are examining options for how we provide advice and assistance linked, where appropriate, to premium reductions. One of our long-term goals is the development of a terrorism database, considering amongst other things the frequency and severity of terrorism incidents. This will take some time as, at present, there are no databases for terrorism in the UK, which are ideally suited for insurance purposes. By considering implications for property damage and business interruption our aim is to produce a reliable source of loss information that becomes an industry benchmark.
Q: Are there any particular issues this database will need to tackle?
We’ve already identified several interesting correlations that have yet to be adequately studied, so they might be included in actuarial models. For example, our analysis of Islamist extremism literature online, suggests there may be a relationship between an increase or change in the material available on the internet and the subsequent frequency of attacks. We’re keen to determine, for example, whether an increase in content urging vehicle attacks, correlates to an actual increase in events? We’re also looking at whether frequency spikes around certain key dates, or how the experience and success rate of a country’s intelligence services can be properly recognised? The geographical distribution of attacks and trends in target types is also an important research area which we’re keen to tackle.
Q: How can your research assist in that?
By identifying factors that have a material impact on terrorism trends, we hope to inform risk mitigation best practice. Some of these best practices will be physical, some sociological, some economic, some investment, some about education, but they can all have an effect on identifying, reducing and ultimately managing the risk.
We have to be more intelligent about how we model these incidents and the comparative probabilities of various scenarios. With the knowledge this provides, we can then advise our Members and by extension, our insureds, on efficient and effective mitigation strategies, from the simple installation of physical security measures, to much more complex strategies for approaching the threats.
As has been witnessed this year in the UK, businesses are very much on the front line, with their people, assets, revenues and shareholder values all at risk. We will never achieve zero risk in the fight against today’s terrorists, but our aim is provide comprehensive and timely qualitative and quantitative research, to help with ensuring an appropriate response to this challenging peril.