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Overview

Crime & Terrorism Insurance is considered a particularly difficult field to master as the forecasting of the probability of an attack can be extremely complex, and the potential liability enormous.
It is estimated that the September 11, 2001 attacks resulted in a final loss of almost USD32 billion, making it the largest insurance claim in the industry's history. The predicament for the insurance industry however is not just limited to large-scale attacks on nations and economies. It also relates to low impact incidents – such as kidnap and ransom – which are especially pertinent both to specific corporations, as well as to vulnerable individuals.
The following factors taken together – location, occupation, uncertainty and potentially huge losses – make the setting of insurance premiums a highly complicated task which can often result in premium overkill for the client; that is to say a price premium that is not justified by the true risk level to the client. Thus the advanced assessment of the risks posed by terrorism & crime forms an essential and integral part in the finding of a reasonable balance between premium costs and adequate & acceptable security.
Alcyon, together with the assistance and guidance of international insurance experts, has developed a unique and proven terrorism & crime risk insurance methodology that provides both a quantitative and qualitative tool for insurance premium purposes.
 
Methodology

Alcyon’s unique assessment methodology is based upon up-to-date research and analysis of terrorist capabilities, motivation and the trends of attacks, the product of which determine the assessed threat levels.
The Risk is represented as the product of the Threat, Vulnerability and Consequence of a given security breach.
 
This results in a risk-based decision-making calculation where the formula is:
Threat (T) x the Vulnerability (V) x the Consequence (C) of a successful attack scenario.
 
Risk-based decision-making
 
Other factors included are:
 
R = P x C, where
 
R = the risk of a security breach
P = the probability of a security breach, which is further defined as (T x V)
C = the consequences of a security breach

Assessment

In the context of assessing risk, Alcyon collects relevant information concerning potential targets; determines the specific threats faced; assesses the related vulnerabilities and consequences; and recommends means for mitigating the risks to a minimum.
 
 
Alcyon’s assessment methodology examines:
  • The threat of large but infrequent attacks, as well as of smaller but more frequent attacks which may could pose particular challenges to specific industries
  • The vulnerability to attack in terms of both accessibility and the ability to control the threats
  • The human & economic consequence of different attack scenarios, including the impact of conventional and non-conventional attacks
  • The variation of risks across various economic, demographic and geographic sectors, as well as the way in which these risks can be mitigated
Significant savings

Alcyon's unique terror & crime risk assessments can save corporations significant insurance-related expense through the advanced assessment of the company's true risks and the recommendation of efficient and effective mitigation strategies.