Evolving Terrorist Threats: How Can Businesses Mitigate the Risks?

OVERVIEW

The March 2019 mosque shootings in Christchurch, New Zealand and the 2019 Easter bombings in Sri Lanka demonstrate that active groups, influenced by either form of extremism, aim to inflict mass casualties and create and exacerbate divisions within countries.

Two in five countries worldwide are exposed to some degree of terrorism risk, according to Aon’s 2019 Risk Maps, which examines political risk, terrorism and political violence and their impact on global trade around the world. The report also found that sixteen percent of all terrorist attacks in 2018 targeted or directly affected businesses. From construction to transport and critical infrastructure, various industries across Asia have suffered the knock-on impact of these types of attacks.

Considering the evolving landscape, how are organizations keeping their people safe and helping preserve overall business continuity?

IN DEPTH

Evolving ideologies and changes in methods of attack around the world continue to redefine terrorism, resulting in global geopolitical and economic uncertainty. Today, the new risks posed by returning Islamic State (also known as ISIS) fighters in Asia are comparable to the emerging threat of far-right extremism in North America and Europe – and businesses want to understand and limit the impact of volatility on their operations.

The changing face of terrorism

On Easter Sunday, the world witnessed a sophisticated and coordinated string of terrorist attacks across multiple locations in Sri Lanka, which left more than 300 people dead and 500 injured. The government said the bombings might have been in retaliation for the killing of 50 people at mosques in Christchurch, New Zealand in March 2019, and that two Islamist extremist groups, National Thowheed Jamath and Jamathei Millathu Ibraheem, might have been involved. Meanwhile, ISIS has claimed responsibility for the coordinated attacks.

The 2016 Holey Artisan Bakery attack in Dhaka, Bangladesh, bears a resemblance to the ISIS-inspired Sri Lanka attacks as well, targeting foreigners and the economy, and resulting in more than 20 civilian deaths and 50 injuries. In yet another ISIS-claimed attack, in January 2016, a series of explosions rocked the Indonesian capital, Jakarta, with gun battles on the streets, killing four civilians and injuring more than 20.

Whether these attacks across Asia in recent years were conducted on behalf of or by pure allegiance toward ISIS, they are all examples of the rising terror threat in the region, with ISIS ideology being exported worldwide via the Internet as well as inspiring radical actors.

In addition to the spread of ISIS ideology within Asia, another concern is the return of fighters back to the region due to ISIS’s loss of territorial control in Syria and Iraq. “This indicates that the terrorism risk in Asia is heightened as countries that might have been considered lower-risk locations, are now seeing fighters return,” says Julian Taylor, Head of Crisis Management, Asia, Aon.

What does this mean for business in Asia?

The numerous terrorist incidents in Asia over the last decade – from Christchurch to Sri Lanka, Jakarta to Dhaka, and Mumbai to Mindanao – underscore the terrorism exposure that businesses face in the region. “Sri Lanka demonstrates that you don’t have to be a specific target to be a victim,” says Taylor. “These increased incidents of terrorism are indeed creating new risk exposures for businesses in Asia, and it bodes well for organizations to take heed.”

Taylor explains that many businesses in countries that experience terrorist incidents would be directly or indirectly affected by the attacks. “For instance, hotels that are not directly related to the physical attack itself will be affected by the downturn in tourism,” he added.

The expected hit to Sri Lanka’s tourism sector (which accounts for around five percent of the country’s gross domestic product) due to the Easter Sunday attacks has led consultancy Capital Economics to downgrade its 2019 growth forecast for the country to just one percent from 3.2 percent previously. In fact, according to the Global Terrorism Index 2016, tourism’s contribution to GDP is double in parts of the world that have not experienced a terrorist attack that year.

The economic impact post-terrorist incident may also be felt by businesses in the affected country for years following the actual incident. For example, after the 2012 Bali bombings, arrivals to the Indonesian island dropped by 40 percent and didn’t return to pre-attack levels for two years.

How can businesses manage these risks?

Many firms no longer view terrorism cover purely in terms of property damage and business interruption. As motives and methods of terrorism evolve, ensuring safety measures are in place to address the potential impact on people and operations, as well as brand reputation, should now be a central tenet of any risk management program.

“Businesses investing across borders should closely monitor terrorism-related incidents and tensions in the host countries where they operate and consider their insurance coverages in response to changing exposures and the potential for volatility caused by such incidents,” Taylor concludes.