In the wake of the terrorist attacks on the U.S. on September 11, 2001, AIR initiated an intensive R&D effort to develop a model with which AIR's clients could assess their exposure to a new and potentially devastating peril. The outcome of that effort, launched one year later, was the industry's first detailed terrorism loss estimation model. The model estimates property and workers' compensation losses due to potential future terrorist attacks in the United States.

Weapon Damage Models

Terrorists have at their resources a wide and growing range of weapons with which to damage and destroy buildings and to cause large numbers of injuries. The physical damage effects of bombs on building structures are well understood based on decades of weapons research. AIR enhanced the analytic estimation of building damage to account for the complexities of urban environments of varying density. Bomb blast injury severity estimates are based on the most comprehensive medical research on blast injuries that have occurred around the world.

Terrorists aspire to using weapons of mass destruction to cause mass casualties and large scale destruction. AIR leverages the U.S. Department of Defense's Hazard Prediction and Assessment Capability (HPAC) model to assess contamination and injury levels for chemical, biological, radiological, and nuclear (CBRN) weapons.

AIR's Landmark Database

AIR compiles and maintains a comprehensive database of nearly 300,000 "landmark" targets located throughout the 50 states. These targets cover the full range of possible terrorist objectives, including transportation hubs, energy utilities, bridges, medical facilities, other national infrastructure sites, tourist attractions, and both government and private-sector properties. Among our data sources, AIR utilizes ISO's ProMetrix database to develop quantitative information on these landmarks and surrounding properties. ProMetrix contains comprehensive information on size, construction, occupancy and protection for approximately three million commercial properties in the United States.

Estimating the Frequency and Severity of Future Attacks

To estimate the frequency and severity of future attacks, AIR employs the Delphi Method, a structured process to capture and statistically combine the opinions of a team of terrorism experts familiar with both the historical data and with current trends. These experts have operational experience in counterterrorism at the highest levels, including the FBI, CIA, Department of Defense, and Department of Energy, and currently specialize in terrorism operational threat assessment.

The result is a large catalog of potential future attacks that considers the full range of threats, including possible strikes undertaken by domestic extremists, formal international and state-sponsored organizations, and loosely affiliated networks of like-minded small groups and individuals.

A Comprehensive Solution

Managing risk from terrorism has, unfortunately, become an essential part of today's business decision-making process. The AIR Terrorism Loss Estimation Model produces fully probabilistic estimates of property, workers' compensation, life, accident and health, and disability losses—estimates that support pricing and underwriting decisions down to the individual policy level. AIR software tools efficiently measure exposure concentrations in a single building and within a defined radius, and also provide for identification of maximum loss scenarios, called deterministic scenario loss analysis.

AIR currently offers a terrorism model for:

  • United States
  • AIR has the added capability, on a consulting service basis, of analyzing terrorism risk both deterministically and probabilistically in any country
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