Terrible twins: what the climate-security nexus means for re/insurance

The terrorism re/insurance industry should explore ways of improving its resilience to the systemic risks of climate change and how best to manage and mitigate this catastrophic tail risk, according to a new report on the “climate-security nexus”.

“A Climate of Terror? Part I: Approaches to the Study of Climate Change and Terrorism” published jointly by the International Forum of Terrorism Risk (Re)Insurance Pools (IFTRIP), Pool Re Solutions and the National Consortium for the Study of Terrorism and Responses to Terrorism (START), examines how climate change interacts with terrorism—as an indirect contributor, as an ideological driver, and as a means with which to control populations.

“Increasing evidence from around the world shows that climate change can exacerbate and compound risks known to contribute to insecurity factors that drive violent conflict,” the report says.

“While significant attention is given to the complexities of the relations between climate change and violent conflict, less attention is paid to the ways climate change potentially fuels or aggravates enabling factors and drivers that set the stage for terrorism,” it adds.

A key finding of the report is that, while climate change may not be a direct “root cause of terrorism”, it is recognised as a predominant destabilising force that fosters an enabling environment for violent extremist organisations (VEOs).

“When regions are exposed to, or situated in, an environment susceptible to climate insecurities and are highly dependent on that environment for livelihoods, a positive correlational relationship between climate change and violence strengthens. This relationship may affect violent extremism as well,” it says.

During the 1990s and early 2000s the Earth Liberation Front conducted a series of attacks that resulted in millions of dollars of property damage and serve as the foundation for understanding climate change as a potential ideological driver of terrorism.

So-called Neo-Luddites, the Anti-Technology Movement, and “eco-fascists” currently present the most significant concern due to their support for violence against humans and desire to destroy technology assets. However, the COVID-19 pandemic has caused disillusionment within mainstream environmentalist movements which may shape future ideological and tactical considerations.

“VEOs may exploit the effects of climate change as a means to exert influence over populations by exercising strategic tactics (capture, sabotage, and/or looting) to cause physical and economic harm to infrastructure and services or choose to strategically control such resources,” the report says.

The profitability of controlling essential resources may lead to more VEOs strategically capturing resources and their markets fully, or partially, and weaponising them to support operational functions.

“VEOs may exploit weakened (real and perceived) government capacity and legitimacy to respond to climate change by fostering radicalisation narratives of alienation and abandonment,” according to the report.

It continues: “VEOs may exploit individual and group grievances and insecurities worsened by climate change for recruitment into violent radicalisation, including fostering narratives of marginalisation, exclusion, and relative deprivation.”

The report’s authors make five main recommendations:

Strengthen partnerships

Stronger partnerships between the re/insurance sector, researchers responsible for better understanding climate change and violence risks, and governments tasked with the protection and well-being of citizens can facilitate better, more coordinated responses to climate change and its negative impacts. Additionally, the re/insurance sector should seek to partner with and support corollary forms of data collection and application.

Improve frameworks

The re/insurance industry serves as an expert on risk management. As climate change increasingly becomes a systemic risk to global stability—compounding other major societal risks—creating new frameworks that are risk-based and anticipatory is necessary to manage the potential impacts of climate catastrophes and climate-related risks.

Re/insurers already work with sophisticated tools related to natural catastrophes. Taking this into account, the integration of diverse data and methods can further improve risk modelling, such as multiple scenario analysis, providing meaningful and design-useful information and analysis for decision making.

Support resilience efforts

The re/insurance industry is well-positioned to educate stakeholders and invest to support the transition to a more resilience-focused future. Risk awareness must be coupled with a better understanding of how societal and economic resilience plays a key role in alleviating the potential impacts of climate change catastrophes and political violence.

The re/insurance industry can play a pivotal role in building socioeconomic resilience to climate change risk from the beginning with the right partnerships, data and methods, and standards.

Set standards

Collaborative and clear definitions, and concept setting and transparent data on climate change and terrorism are necessary. To leverage the re/insurance industry’s expertise in risk management to address climate change, standards must be set. Standards must be scalable and sustainable. A strong evidence base with scientific methodologies is needed for standards to be set to ensure a better impact on the economy.

Quantitative (near-term) and qualitative (long-term) assessments are both useful in strategically setting and adopting standards.

Rescale scope

While climate change and terrorism are global phenomena, their severity and frequency are distributed unevenly. Therefore, the scope at which climate change and terrorism impact society must be responsive to varying scales of investigation over different time horizons. The re/insurance industry needs to take into account more frequent and less severe forms of climate-related acts of political violence (eg, riots) and malicious activities (eg, sabotage, selective damage, blockades). Creating more risk-specific guidance is essential to navigating evidence-informed decisions in risk management.

The full report can be found here.