The evolution of terrorism from large-scale, organised plots to individual, lone-wolf terror attacks has introduced a new risk landscape for businesses. Whereas traditional attacks sought to cause damage to property, modern attacks introduce different exposures including interruption to operations and other non-damage related events. To minimise loss, businesses must understand their exposure and reassess their protections accordingly.
An evolving threat landscape
Recent years have seen a marked evolution in the nature of terrorism and terrorist attacks. The perpetrators of such attacks have traditionally been highly organised groups with clear political or ideological intent. This is true of one of the most famous attacks to affect the US in recent years: the 9/11 attacks in September 2001, which involved the hijacking of four commercial passenger planes by the terrorist group Al-Qaeda, resulting in loss of life and widespread disruption. In the UK, notable attacks include the 7 July bombings, which struck London in 2005, but also the actions of the IRA and other dissident groups in the 1980s, whose often fatal attacks caused damage to various forms of property, including pubs, department stores, hotels, and schools.
Although organised terrorist groups remain a threat, they have since been replaced as the predominant terrorist risk in many western nations. In January 2025, 17-year-old Axel Rudakubana admitted to the murder of three young girls in Southport in summer 2024. His admission prompted UK Prime Minister Keir Starmer to announce that “terrorism has changed” (opens a new window), citing the threat from “individualised extreme violence” committed by “loners, misfits [and] young men.” These attackers are not politically motivated, but seek violence “seemingly for its own sake.”
These ‘lone-wolf’ attackers and active assailants typically employ different means to commit their crimes. In the case of Rudakubana, the murder was carried out using a knife that he had purchased online, but other weapons of terror include guns, and vehicles. Recent months have seen three such attacks involving terrorists who have driven vehicles into a crowd of people: one in Bourbon Street (opens a new window), New Orleans on 1 January 2025, and two in December, at a Christmas market (opens a new window) in Magdeburg, Germany, and a stadium (opens a new window) in Zhuhai, southern China. In the UK, examples include the 2017 attack on London’s Borough Market (opens a new window), and at nearby Fishmongers Hall (opens a new window) two years later.
How terrorism impacts business revenue
Where they occur, terrorist attacks can result in severe consequences to businesses. In the case of traditional attacks, damage to property is a common threat – for example, due to the result of a gunfire, vehicle, or explosive.
Lone-wolf attacks are unlikely to result in aggregate losses on the scale of traditional attacks. However, their consequences can still be severe through the potential to cause significant business interruption, negatively impacting revenue and profit. For individual businesses, many of whom are already grappling with increased costs following years of high inflation, and forthcoming changes to employer’s National Insurance, these additional costs can be devastating.
In the wake of an attack, several factors can lead to business interruption. For instance, businesses may be unable to operate if a nearby attack prevents staff from accessing businesses premises, or inhibits the delivery of essential goods. Alternatively, where a terrorist attack or subsequent police/military cordon prevents customers from accessing a business, it could lead to reduced footfall.
In the UK, the majority of Terrorism and Sabotage Insurance policies include property damage as a key trigger, reflecting the nature of traditional threats. To be covered, the attack may also have to have a clear political, ideological, or religious motive. As terrorism continues to evolve, many businesses therefore find themselves without protection against the costs of an attack.
Minimising financial loss
To minimise exposure to potential threats, businesses can:
Seek external advice to understand and map potential threats (e.g. scenario planning exercises)
Conduct a review of existing coverage to see how it aligns with business risks – for instance, certain policies may not respond to threats without a clear political, religious, or ideological motive
Regularly assess policies to protect against emerging risks – for instance, updating policies to include triggers relating to bodily harm.
Stay up-to-date with latest terror threats and information
In addition to losses arising from terrorism, businesses are also under growing regulatory pressure to prevent terrorists from successfully causing harm. Martyn’s Law, currently undergoing scrutiny in the UK Parliament, is one such example. The bill imposes a new duty on businesses to secure venues against terrorism (opens a new window), with potential consequences for non-compliance.
Insuring against the remaining risk
To insure the remaining risk, businesses may wish to explore a tailored policy via London Market insurers. Coverages available through these policies can include:
Non-damage business interruption – e.g. in the case of non-damage business interruption, or ‘malicious threat’ – a lower threshold than policies which require a political, ideological, or religious triggers.
Losses arising from attacks causing bodily injury – once again, this ensures policyholders are covered even where an attack doesn’t cause damage to their premises.
Losses arising from ‘denial of access’ – where attacks hinder the use of premises, or where premises are sealed off as a result of a police/military cordon.
Losses arising from liability – coverage for third-party or employee lawsuits and ensuing defence costs, following either terrorism or a malicious event involving a handheld weapon.
Long-term losses arising from loss of attraction – the sustained downturn in profits post-event. Likely to be most acute in the initial days/weeks following an attack, but the effects may continue indefinitely depending on the perception of future threat. In certain circumstances, long-term losses may be greater (e.g. where a hotel experiences a local terrorist attack during the off-season, which later depresses revenues during peak times). Cover is for 60 days as standard, but may be extendable to up to 18 months.
For more information, reach out to a member of our team.
