Is Terrorism An Insurable Risk - 1719 Words

a) is terrorism an insurable risk? Terrorism is considered insurable until the insurmountable loss of the attack on the World Trade Center and the Pentagon. Prior to 9/11, terrorism did not consider a risk by insurance companies and was covered in most standard all-risks commercial and homeowners policies’ that covered property and contents damages. However, the extreme event of September 11 accumulated a loss of approximately $40 billion and the magnitude of this loss was too large for the insurance industry to handle and therefore the government agreed to share the loss. As a result, the US Congress passed the Terrorism Risk Insurance Act in 2002, with both the insurers and the federal government sharing the risk. Risk is defined as a potential for an unwanted outcome resulting from an incident, event, or occurrence, as determined by its likelihood and the associated consequences (Baranoff et al, 2011). In order for risk to be considered insurable, it must meet two conditions provided by the insurance industry. One is that the risk must identify and quantify or estimate the chances of an event occurring with the likelihood of losses incurred. Secondly, the insurance industry must be able to set premiums for each potential customer or class of customers (Groner, (n.d)). If these two conditions are met, then the risk is considered to insurable. To assess if terrorism is insurable within the context of these two conditions we will begin by analyzing the first condition. ItShow MoreRelatedCyber Crime And Cyber Terrorism1801 Words   |  8 PagesCyber risks can be divided into the following groups (Marsh, 2013): 1. Physical loss of systems – Physical information technologies systems, i.e., computers, servers and other electronic equipment are required for the cyber activity. Consequently, it is very important to consider the risks related to the damage or loss of the physical electronic equipment. Risks can be for example, internal water damage in the office building damaging the computers and other equipment or fire in server room as aRead MoreInternational Management 7e (Deresky) - Ch.1 : Discussion and Analytical Questions1585 Words   |  7 Pagesas energy. 2- Discuss examples of recent macro political risk events and the effect they have or might have on a foreign subsidiary. What are micro political risk events? Give some examples and explain how they affect international business. Answer: An event that affects all foreign firms doing business in a country or region is called a macro political risk event. In many regions, terrorism poses a severe and random political risk to company personnel and assets and can obviously interruptRead MoreAlumina Inc: Company Analysis612 Words   |  2 PagesProtection Agency. 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