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[ISN] Lloyd's Report Warns of Threats from 'Political Violence'


May 10, 2007

A new report from Lloyd's and the Economist Intelligence Unit (EIU) has 
found that global businesses are becoming increasingly concerned about 
risks from political violence. However, too little has been done to 
analyze those risks and to "really understand" their impact.

One finding from the report "Under Attack: Global business and the 
threat of political violence," revealed that, "concerns regarding 
terrorism and political violence are causing businesses to avoid 
investing in politically sensitive areas or locating offices in large 

The survey canvassed 154 global business leaders and found that over a 
third of companies avoid investing in overseas markets for fear of 
political violence, while 20 percent have relinquished promising 
business opportunities for the same reason.

Lloyd's Chairman Lord Levene indicated that businesses needed to 
understand their risks better. "There is a large gap between what 
businesses perceive as a threat and the reality," he noted in a bulletin 
on the Lloyd's web site (www.lloyds.com). "Many companies are changing 
their plans based on perceived threats, which is a problem if their 
information is incorrect."

The report is part of Lloyd's 360 Risk Project which aims to generate 
debate on how businesses can manage risk. One, somewhat surprising 
conclusion, revealed that some 60 percent of the businesses questioned 
rely on international media coverage to come to a decision on what risks 
they face.

Levene pointed out that "media coverage tends to focus on radical 
religious terrorism and rarely touches on the emergence of new risks, 
such as threats to supply chains, cyber terrorism, home grown terrorism 
and the threat of chemical, biological, nuclear and radioactive attack."

Dr. Paul Kielstra, author of the report and contributor to the EIU, also 
indicated that businesses place too much emphasis on the wrong 
information. "As a result, only 37 percent of business leaders feel 
their companies have a good understanding of the political violence 
risks they face," he noted.

In addition Lloyd's found that despite the multiple threats "over 37 
percent of companies surveyed had either no business continuity plan, or 
one that did not adequately take account of political violence risks."

According to Chris Parker, Head of Terrorism at Marsh UK, the insurance 
marketplace is responding to the threats. Parker said that around $1.2 
billion of capacity is now available from the private market for 
stand-alone terrorism coverage, compared with around $100 million before 
September 11, 2001. He also said that new products were becoming 
available, with $100 million capacity, to cover CBNR risks.

Lloyd's report will be the subject of a debate on Tuesday, May 15. The 
panel session, hosted by Lord Levene and chaired by the BBC's John 
Simpson, will explore the key issues surrounding terrorism and political 
risk and its impact on the business world. Joining them will be business 
leaders and risk experts, including Sir Richard Morttram, Permanent 
Secretary, Intelligence, Security and Resilience; Sir Richard Dearlove, 
former Head of MI6 and Chairman of Ascot Underwriting; and Peter Clarke, 
Head of Metropolitan Police's Anti-Terrorism Branch.

(c) 2007 by Wells Publishing, Inc.

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