9/11: Never forget

Nobody has forgotten where they were on the day of 11 September 2001.

I was in my first role as a financial journalist, working on London’s Fleet Street, when a colleague ran in to tell us that a plane had hit the Twin Towers. There was no TV in the office, so we watched in shock and horror at a nearby sports bar as the second plane ploughed into the South Tower. 

There is no need to go into detail on the images that followed, how one by one the towers collapsed beneath a mushrooming dust cloud. These details are forever etched into the public consciousness.

It was an attack on a scale that had never been seen before or since. A tragedy which claimed 2,996 lives, injured over 6,000 others and forever changed the world’s understanding of terrorism risk.

Where were you?

For Julia Graham, CEO of Airmic, there are strong memories 20 years on.

“Most of us remember exactly where we were and what we were doing that day, as well as the shock and emotions felt at seeing the tragic events in New York and Washington, DC unfold on television screens.”

“I stood with my Global CEO as the second tower was hit and colleagues on calls with contacts in the Towers suddenly had lines go silent.”

“We ran a series of briefings with colleagues who ran our New York USA and Global response - the experiences relayed by our New York team will remain me forever.”

“When we take the time to remember 9/11 and the people whose lives were taken or transformed that day, as risk professionals we will be reminded of and reflect again on the lessons learned,” Graham continues.

“Across industry sectors, 9/11 transformed how we prepare for and respond to unimaginable threats and events.”

As we continue to grapple with a global pandemic, the anniversary of 9/11 is another reminder of the fact that major shocks can and do happen.

“Thinking and practice on resilience has come a long way since 2001,” notes Graham.

“We know that we must remain alert and agile at all times, continuously scan the horizon, and be rehearsed and prepared as risk professionals for ‘impossible’ events - and to meet and counter the changing risk environment.”

Governments on high alert

The 9/11 attacks and their aftermath continue to influence geopolitics to this day: most poignantly and recently with the Taliban taking back control of Afghanistan.

As the anniversary approaches, governments have been on high alert. “The anniversary would be an opportune moment to mount an attack, and 9/11-related propaganda is frequently used by Al-Qaeda as a means to inspire people to take violent action,” says Joel Gulhane, MENA analyst at Dragonfly.

“The Taliban’s control of Afghanistan presents another opportunity for Al-Qaeda to rebuild its networks with the ultimate aim of mounting spectacular, long-range complex attacks in the West. However, if past such attacks and plots are any guide, it would probably take a few years for this kind of threat to materialise.”

Western security and counterterrorism has gone a long way to preventing further attacks of this nature in the two decades since. There has been a shift away from targeting ‘trophy buildings’ and government assets, to ‘soft targets’ - people - using improvised weapons, including vehicles.

“The events of 11 September 2001 exposed gaps in the capabilities of intelligence agencies, with the 9/11 commission critical of intelligence sharing across the US government and with foreign governments,” notes Gulhane.

“In response existing alliances through groups such as Five Eyes, or bilaterally with key allies, were strengthened and have successfully countered terrorist threats. For example, intelligence shared by Saudi Arabia was a key in foiling an attempted bombing of cargo planes bound for the US in 2010.”

“While these efforts have made Western countries safer, large parts of the Middle East, and North and Sub-Saharan Africa, are now more dangerous places,” he adds. “Military interventions in Afghanistan, Iraq and Mali together with the instability of states across these regions fostered conditions in which terrorist groups and insurgencies have flourished.”

“Although some jihadist militants remain highly intent on mounting large scale attacks in the US and Europe, they would struggle to organise and conduct an attack on the scale of 9/11. Nonetheless, terrorist groups are continuously innovating methods of attack and leveraging new communication channels to avoid detection, such as free-to-access encrypted messaging services.”

Smaller scale attacks carried out by single perpetrators or small teams are more likely to slip under the sophisticated surveillance net. Nevertheless, terrorists have killed an average of 21,000 people worldwide each year over the past decade.

One event or two? Lessons for insurers

When I joined Global Reinsurance magazine in July 2005 (just after the 7/7 London attacks), the highly-publicised legal battle over whether the WTC attacks constituted one event or two, was ongoing to determine the extent of the insurance claim.

I visited New York that October, spending some time at Ground Zero, and spoke to individuals directly affected by the attacks. Reinsurance brokers who had lost colleagues in the towers, companies that had moved staff out of ‘trophy buildings’ and in some cases, out of Manhattan altogether. Broker Marsh had lost 295 people in one of the towers.

The event had shown the critical need for contract certainty within the insurance industry (the days of policy terms being agreed on the back of a restaurant napkin are not that long ago). Culturally, it was a wake-up call for the London and Lloyd’s market to adopt better standards of professionalism.

9/11 also led to the birth of the standalone terrorism insurance market and TRIA, the US public-private terrorism backstop (or TRIPA 2019 as it is now known). Without the federal government stepping in as reinsurer-of-last-resort, a viable market for terrorism coverage would have been extremely challenging, if not impossible.

“Before 9/11, terrorism risk was largely unmodeled and inadequately priced,” explains Shrunti Deshmukh, product manager at RMS in a retrospective blog. ”After 9/11’s catastrophic losses, the reaction from the insurance industry was to actively exclude terrorism coverage, and questions had already been raised about the actual likelihood and severity of terrorism risk.

”The 9/11 attacks opened the door on a world of possible risks that insurers hadn’t considered before, along with future risk that had to be managed.”

Even today, concern over tail risk emanating from major terrorism attacks - including chemical, biological, radiological and nuclear - has been a major driver for the continued renewal of TRIA and the existence of other terrorism risk pools around the world.

”Terrorism has systemic risk potential, as seen during 9/11 which was ultimately a clash event with many coverages triggered,” write Deshmukh. ”Among direct physical damages, terrorism can affect critical infrastructure and disrupt supply chains that, in turn, disrupt businesses which can result in business interruption (BI) claims.”

Lee Coppack, media coordinator for FERMA, also a former editor of Global Reinsurance and StrategicRISK, recalls the fallout for the industry in the immediate aftermath. At the time, she was working for catastrophe risk modelling firm RMS.

“Of course, RMS is a US-based business, so there was a lot of shock - especially for the people in the offices across the river in Newark, NJ. I don’t remember that RMS lost anyone, fortunately. Of course, RMS immediately started building terrorism cat modelling capacity and Gordon Woo [currently catastrophist at RMS], who is a mathematician, became something of a star.”

Coppack remembers that automotive manufacturers suffered from significant business interruption following the attacks, because just-in-time materials were not coming across the Canadian border. And that terrorism exclusions were introduced almost immediately in property-all-risks and aviation insurance policies.

“I did write some copy for L’Argus de l’Assurance. Claire Wilkinson, who is now at Business Insurance told me about her experiences on the day. She was working with the Insurance Information Institute (III) in Wall Street. And Sean Mooney, the late economist at Guy Carpenter [part of MMC] talked to me, too. He’d had to walk down many flights of stairs in one of the towers to escape.”

What are your memories of 9/11 and how do you feel it has shaped our understanding of terrorism and geopolitical risk in the two decades since the attacks?