Experts believe high youth unemployment in Europe and low economic growth could be contributing to an increased threat from lone, radicalised terrorists

Following the terrorist attacks in Norway on July 22 many risk managers are asking themselves how the risk of terrorism is changing. The Arab spring, the death of Osama Bin Laden, economic and demographic pressures in Europe and the US have all had a significant effect on the source and type of terrorist attacks.

The sovereign debt crisis, high youth unemployment and low economic growth have the potential create an ideal environment for the radicalisation of individuals. “During times of economic stress there can be an increasing risk of radicalism as certain sectors of society can find it harder to find work, leading them to feel disenfranchised which can increase the appeal of radical ideology,” said Elizabeth Stephens, head of credit and political risk analysis at JLT.

It is a concern that has not gone unnoticed in the risk management community. “We have considered terrorism to be a critical risk for a long time, above all in Spain where the threat of terrorism has been very present in the last 30 years. Fortunately there continues to be a competitive insurance market that allows us to transfer the risk,” said Daniel San Millán, risk manager at Spanish transport and infrastructure company, Ferrovial, and president of Igrea, the Spanish risk management association.

With various attacks from the Basque separatist group ETA and the terrorist bombings in Madrid in 2003 Spanish risk managers are acutely aware of violent risks. “The only similarity between the attack in Norway and the attack in Madrid in 2003 is the horror and barbarity of killing people for fanatical beliefs. But we believe that the sources of the attacks are very different and don’t have much similarity,” added San Millán.

The attacks in Norway have caused many people to question the effectiveness of European anti-terrorist intelligence and security measures. “These territories all have counter terrorism units but what we don’t know is how many events they prevent. So the one event happens and suddenly there are questions over their effectiveness and were they doing enough,” commented Kelly Crouch, head of war & terrorism at JLT.

On the other hand, the weakening of al Qaeda’s infrastructure and the killing of Osama Bin Laden demonstrate the success of some western anti-terrorist activities. “One of the reasons why we haven’t seen a big Islamic terrorist attack in the UK since 7/7 is because the western European governments and the US have been so effective in disrupting the training networks of al Qaeda and its affiliates,” said Stephens. But this disruption increases the likelihood of attacks coming from lone individuals such as Anders Behring in Norway, she said.

The events in Norway have some similarity with the attack by Jared Lee Loughner in the US in January. Loughner killed 6 people in a firearm attack in Tucson, Arizona. The dead included Chief U.S. District Court Judge John Roll and Loughner also severely injured Gabrielle Giffords, a Democratic member of the United States House of Representatives.

Both of these attacks demonstrate that companies and countries cannot allow themselves to be blinded to attacks from other sources. “Europe has been the target of radical terrorism for some time and we continue to manage this risk as a major priority, above all after the death of Bin Laden,” said San Millán. “New technologies are going to play an increasingly important role in the prevention of terrorism and we are disposed to make significant investments in this area.”

As the dynamics of terrorism change companies need to be aware of risks coming from within the country as well as internationally. “I think there is a change in the perception of the origin of these terrorist threats. For example, the US government is now working hard to prevent the radicalisation of Muslim-American citizens and that’s quite a new move in America,” said Stephens.

Companies’ terrorist risk management should not be changed impulsively following the tragic events in Norway. However risk managers need to understand how the threat of terrorism could be changing (from radical Islam to lone terrorists) and how this will affect their businesses.