Terrorism risks: How to prepare


By Neil Amato

Terrorism – particularly events aimed at so-called soft targets such as shopping malls, stadiums, and public streets – is on the rise, and not just for countries that appear as red on a risk heat map.

The latest example: the explosion Monday at a concert in Manchester, England, which has underscored the need for all kinds of organisations to be vigilant. News reports Tuesday evening said 22 people were killed and many more injured.

Indeed, organisations can’t prevent every sort of risk, especially those related to terrorism, but they can take steps to address them by putting together a detailed plan that accounts for their workers’ safety, their supply chains, and their customers.

Terrorist attacks worldwide grew from 3,633 in 2015 to 4,151 in 2016, a 14% increase, according to an annual report by Aon. Western countries saw a 174% increase, the report said, from 35 attacks in 2015 to 96 in 2016. In Germany, for example, there were a total of three terror attacks from 2013 to 2015. In 2016, Germany suffered 17 attacks that killed 14 and injured 77, according to Aon.

Oil and gas companies are more commonly targeted than others, Aon’s research showed. The report noted that attacks by militants in the Niger Delta region during the first half of 2016 caused Nigerian oil production to fall by 36%. And the threat is ongoing, even amid negotiations between the government and rebel leaders, according to The Guardian.

Multinational companies must develop plans for workers stationed in areas that have an unsettled political climate – how to stay safe at home and at work, and what to do in the event of an emergency.

Even in relatively stable nations, plans should be communicated that include being on the lookout for suspicious activity. Additionally, the same way an organisation might have a plan in place to adjust for currency fluctuation or a major weather event, it should instruct staff in advance on how to react to a terror threat.

‘A known risk’

Terrorism “is now a known risk,” said Mark Beasley, CPA, the director of North Carolina State University’s Enterprise Risk Management Initiative. “Entities must acknowledge that risk and then develop a playbook for thinking through the impact of an event on them, their employees, and their customers.”

The details of the playbook depend on numerous factors, such as a company’s business sector, its locations, and its supply chain. On a high level, the CEO, corporate communications team, and operational leaders must know what steps to take in the event of a terrorist act.

If a terrorist takes the life of a company employee, will grief counsellors be on hand for the victim’s co-workers? Or, if expatriate employees are in a dangerous nation, what is a plan for them to evacuate? What are contingencies in the supply chain if access to a particular region is cut off?

A report by insurance provider Chubb said that well-managed companies doing business abroad can respond to terror threats first by analysing risks and weighing them against potential rewards for a particular project. Then, organisations must communicate those risks to employees and equip them with needed training and security measures.

Companies can focus internally, but they have little control over attacks that occur on soft targets. One example is the Bastille Day incident in Nice, France, in which a man deliberately drove a cargo truck down a crowded pedestrian street, killing more than 80 people last July. Such events are particularly a threat in Western Europe, according to analyst Riccardo Dugulin in Global Risk Insights. A decrease in restaurant bookings and lower hotel occupancy rates are two business risks associated with such attacks.

“It raises questions linked to travel security policies, duty of care responsibilities, and the overall capacity of firms to mitigate security risks for their employees and assets,” Dugulin wrote. Organisations of all types “are increasingly exposed to Europe’s ‘new normal’, which requires the implementation of new internal policies and a fresh understanding of the local risk environment.”

Related CGMA Magazine content:

Grey Swans Spread Their Wings”: Organisations are increasingly focused on managing risks related to the unexpected outcomes of expected events.

Building the Crisis-Ready Board”: Board members take their role in crisis management very seriously, but the capability of their companies to manage a real-life crisis may be less clear, a global Deloitte survey suggests.

Neil Amato (Neil.Amato@aicpa-cima.com) is a CGMA Magazine senior editor.