Understanding of terrorism risk insurance is lacking and risk managers must do their homework before deciding between traditional or standalone policies, according to a Risk and Insurance Management Society report.

Author Micah Skidmore says terrorism insurance is an increasingly important element of domestic corporate cover.

“While concern over terrorism risk is palpable, information and understanding of terrorism risk insurance is not as well known,” Mr Skidmore says.

“With terrorism risk being an unfortunate reality, corporate risk managers and counsel can take proactive measures to contain a risk that otherwise knows no bounds.”

The report identifies a shift in domestic terrorism risk to fewer, high-profile events involving bodily harm, citing the small group or “lone wolf” attacks in Orlando and Dallas last year and the Las Vegas concert shooting on October 1.

“Although we naturally think of property damage and bodily injury as the primary risks associated with terrorism, a significant domestic terrorism incident may present risks along multiple different dimensions,” the report says.

These include fiduciary liability for corporate directors and officers, pollution loss and liability, professional liability, employment practices liability, business interruption, and privacy and network security liability.

Risk managers should consider that there is a higher concentration of risk in the media, education, hospitality and healthcare industries when deciding what, if any, coverage is required.

They should also take account of geographical risk factors. For example, in the US an attack is more likely in the northeast and coastal states such as California and Texas.