Risk classification: War and terrorism

Every operational risk professional and every business person who has ever had to try and consistently classify some item of operational risk data fully understands the enormity of the challenge, usually hindered further by the absence of an unambiguous, comprehensive and business-relevant classification taxonomy. In this latest piece for our From the Archives series, RiskBusiness’ Mike Finlay looks at the implications of acts of war or terrorism on a firm, including malicious targeted attacks on a firm’s property or assets, acts of general public disorder and deliberate business disruption. This article was originally published in The Risk Universe magazine in January 2015.

Element name
War and Terrorism

Element description
Losses, business disruption, damage or destruction of the firm’s property, assets, premises or systems and/or injury to staff and/or clients or customers on the firm’s property, arising from acts of politically motivated violence, such as war and terrorism.


Element type: Risk category

Risk type: Operational risk

Classification level: Level 4


Clients, Products and Business Practices

➤ Damage to Physical Assets and Injury

➤ Wilful Damage

➤ War, Terrorism and Public Disorder

➤ War and Terrorism

Industry applicability: Industry generic



➤ Damage or destruction of the firm’s property, assets, premises or systems and/or injury to staff and/or clients or customers on the firm’s property, arising from acts of war, acts of terrorism or acts of national defence.

➤ Bioterrorist attacks, armed assault, bombing, arson, nuclear attack, engineered property destruction, collateral damage from warfare or terrorism, etc.


➤ Malicious targeted attacks against the firm’s property or assets by individuals intent on causing harm to the firm and its staff without apparent political, national or religious motivation.

➤ Acts of general public disorder, such as riots, demonstrations, malicious damage to public buildings and facilities, irrespective whether due to politically motivated acts.

➤ Business disruption caused by workplace or workforce unavailability without damage or from malicious acts against the firm which do not cause damage or injury.

Key identifying tags

Act of terror; act of war; AK47; Al-Queda; Al-Qaeda; Al-Qaida; al-qāʿidah; ambush; anarchy; anarchist; anthrax; armed attack; armed reaction force; army; artillery; assassination; assault rifle; atrocity; automatic weapon; biochemical agent; biochemical attack; bomb; bomb disposal; bomb squad; bombardment; bombing; canonfire; car bomb; CBRN; chemical attack; Chemical, Biological, Radiological and Nuclear; civil war; combat; combatant; commando; counter-terrorism; damage; damage to assets; damage to physical assets; damage to property; destruction; dirty bomb;  emergency response team; ERT; explosion; explosive; explosive device; extremist; fanatic; fedayeen; freedom fighter; fundamentalist; grenade; guerrilla; gun; gunfire; gunman; gunmen; IED; improvised explosive device; injury; insurgency; insurgent; irregular; Islamic State; ISIL; ISIS; jihad; killer; letter bomb; liberation struggle; machinegun; mail bomb; mail bomber; massacre; mercenary; militant; military; mortar; mujaheddin; mujahideen; nerve gas; nuclear weapon; Osama bin Laden;  paramilitary; parcel bomb; physical damage; police; political violence; property damage; radioactive; rebel; resistance movement; revolutionary; ricin; roadside bomb; rocket; sabotage; sarin; security forces; security services; separatist; shelling; soldier; stateless army; suicide bomber; suicide bombing; suicide vest; SWAT; SWAT team; tactical response team; tank; terror; terror group; terrorism; terrorist attack; terrorist cell; toxic chemical; unjustified; vigilante; war; warcrime; war crime; war on terror; warfare; weaponry; wounded.

Common classification pitfalls

➤ Business disruption, irrespective of whether caused by acts of war or terrorism where there is no damage to the firm or its assets, nor injury to the firm’s staff or to its clients or customers while on the firm’s premises, should be classified as business disruption and not under the general grouping of wilful damage.

➤ Distinction should be made between acts of war or terrorism and acts of social unrest and public disorder, given that these typically have different causal drivers and differ in target.

➤ Cases of compliance failures around anti-terrorism financing, suspicious transaction reporting or know-your-customer failures, even if linked to an act of war or terrorism, which do not result directly in physical damage or injury involving the firm or its staff should be considered as compliance breaches.