RMS Unveils Global Terrorism Risk Model

September 23, 2004

Responding to increases in the frequency and severity of global terrorist activity in each of the past three years, Risk Management Solutions (RMS), a provider of products and services for the management of catastrophe risk, announced the launch of a new suite of tools designed to help insurers and reinsurers manage terrorism risk outside the U.S.

The tools include the industry’s first Global Terrorism Risk Model, as well as a multi-country expansion of the RMS Terrorism Scenario Model and accumulation management functionality in the company’s RiskLink(R) catastrophe management software.

“Over the past two years, we have seen increased adoption of terrorism risk management tools for the U.S. within the insurance industry. Now our clients are looking for analytical tools to more knowledgeably underwrite and manage terrorism risk beyond U.S. borders,” said Hemant Shah, RMS president and CEO. “Our new set of tools for global terrorism risk management addresses this need, equipping insurers and reinsurers to assess the risk in essentially any country in the world.”

The RMS Global Terrorism Risk Model allows companies to quantify
property, business interruption, and casualty risk associated with terrorism for locations in 227 countries. The model takes into account an assessment of local threat groups, the “attractiveness” of a location to terrorists, likely attack modes, and historical terrorism loss in the region.

Designed with global underwriters in mind, the tool is reportedly easy to use and requires only basic information about the property such as location, type and size of structure, ownership, and number of occupants. The model can be readily updated by the user to account for perceived changes in the terrorism landscape for a given country.

The RMS model was developed with input from an advisory group of authorities on terrorism, including Jane’s Information Group; Dr.
Rohan Gunaratna, head of the International Centre for Political Violence and Terrorism Research, Singapore; Dr. Bruce Hoffman, director, RAND, Washington, D.C.; Dr. Magnus Ranstorp, director of the Centre for the Study of Terrorism and Political Violence, University of St. Andrews; and Dr. K. Jack Riley, co-director, RAND Center for Terrorism Risk Management Policy.

Other components of the expanded suite of RMS terrorism risk management products are:

* Exposure accumulation functionality is being expanded to all of the
more than 40 countries that are currently supported by RiskLink, the
company’s core catastrophe modeling software. The exposure accumulation functionality allows users to identify and quantify multi-line concentrations of insured exposure within a user-defined radius, and the implications for associated terrorism risk.

* The RMS Terrorism Scenario Model in RiskLink also has been expanded to cover 14 countries. The model allows users to estimate multi-line losses at any user-defined location under 30 different attack
scenarios, ranging from conventional bombs to chemical, biological,
radiological, and nuclear attacks.

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