Following the tragic loss of life in the Westminster, London Bridge and Manchester terrorist attacks, the shape of terrorism is changing again.

The events, leisure, hospitality, retail and property sectors are particularly vulnerable. As we have seen, crowded places are – and will remain – attractive targets for international and “home-grown” terrorists and so an important element of any counter-terrorist strategy is to create safer places and buildings that are less vulnerable to a terrorist attack. Terrorists are increasingly targeting public and private spaces with a high-crowd density.

Cost of terrorism

The human and financial cost of terrorism is growing rapidly. The Institute of Economics and Peace has estimated that the direct cost of terrorism to the global economy in 2014 was $52.9 billion – a ten-fold increase since 2000 – and the indirect costs at $105 billion.

Companies still significantly underestimate their potential exposure to the related risks and losses, especially to the increasing indirect risks from terrorism elsewhere.

It is impossible to completely predict terrorist movement but by working through a range of potential scenarios and consequences it is possible to make informed judgements and set appropriate priorities. The following four-step process is an effective way for companies to think about improving the management of these risks.

Step one: identify the threats. Understand terrorists intentions and capabilities, what they might do and how they might act, is a crucial first step to assessing potential threats.

Step two: decide what you need to do to. Priorities should fall under the following categories: people, physical assets, information and process (supply chains and the operational process required to support the business).

Step three: identify measures to reduce risk. Companies should introduce new proportionate measures that: deter would-be terrorists; aid detection of intrusion; and
delay any attempts at intrusion.

Step four: continually review your security measures. Security and contingency plans should be rehearsed and reviewed on a regular basis to ensure they remain accurate, workable and up-to-date.


Since the IRA attack on the Baltic Exchange in London in 1993, the UK established a mutual government reinsurer, Pool Re, to provide a backstop to insurers that offer terrorism cover on business property and business interruption policies. This has worked well and despite £600 million of claims from 13 separate incidents there has been no use of public money.

However, the increasingly interconnected nature of global commerce means that UK organisations are not only exposed to events in the domestic market but many also have international exposures through the global reach of their business activities. Companies can also be impacted via a change in consumer behaviour in the aftermath of a terrorist attack.

New threats and new risks require new insurance solutions and one insurer is now offering a contingent Loss of Attraction cover.

Business interruption

Many UK companies are unaware, or have underestimated the financial losses that could occur if a key supplier or business partner (in the UK or internationally) were unable to operate for a significant period of time.

It is advisable to check with your insurance broker exactly what you are covered for.

GPS Insurance Brokers 020 8207 7385