Summer in the City: Terrorism, Political Conventions and the Olympics

A little more than a year ago, Britain’s Prince William celebrated his birthday with a costume party at Windsor Castle. While William was addressing the partying crowd, a stranger wearing a black beard, white turban and pink dress and looking a lot like Osama bin Laden bounded onto the stage, grabbed the microphone, spoke to the crowd and then kissed Prince William on the cheek.

Despite the fact that the Osama look-alike was a comedian, few thought it a laughing matter. If the intruder had been a suicide bomber he could have killed all the members of the royal family who were onstage with William. British security forces were promptly taken to task for allowing the stranger to get so close.

This summer, while the world is watching the Democratic National Convention (DNC) in Boston, the Republican National Convention (RNC) in New York City and the 2004 Olympic Games in Athens, security forces will be on full alert to prevent breaches like the one that concerned British security a year ago. Armed with updated intelligence and record funding, federal, state and local officials have taken unprecedented steps to secure these sites. “Our goal is to deter any potential attack with multiple layers of security,” Homeland Security’s Tom Ridge said in Boston.

The DNC and RNC each got more than $50 million in federal funds for security. In Boston, officials deployed thousands of police, closed miles of highway, searched commuters’ carry-on bags, and blocked deliveries of liquefied natural gas near Boston Harbor. What worked at the DNC will be used again for the RNC.

The Athens Olympics will spend a record $1.2 billion on security. About 70,000 police and soldiers are ready to be deployed for the games that begin Aug. 13. Even NATO is helping.

Terrorism experts will be watching to see how well the summer’s security measures work and how close to the center of action terrorists get. Will they get as close as the stranger did to Prince William?

Among those who will be watching is mathematician Gordon Woo. Woo is a catastrophist with Risk Management Solutions (RMS) in London, which develops models to calculate the risk of disasters, including terrorism strikes. Woo said the summer months leading up to the November 2004 elections will provide a critical “laboratory” for better understanding of the risk of terrorism.

“One thing all three of these events have in common is that they are being held at venues for sporting events where it is possible to have good security,” Woo noted of this summer’s big gatherings. The DNC convened in the FleetCenter while the RNC will be in Madison Square Garden and the Olympics will be in a new facility in Athens.

The fact that the two conventions are political is less important to terrorists than the fact they attract crowds and attention, as do the Olympics, and that they are in locations with high name recognition. “They like the possibility for mass casualties and the ‘oxygen of publicity’ that would follow,” Woo noted.

RMS’s terrorism model reflects the latest intelligence on terrorist groups’ capabilities, and on the effectiveness of counter-terrorism measures. All other factors being equal, a property with enhanced security is ranked as less likely to be targeted. As Woo described it, the model assumes there will be more security at the “Statue of Liberty than at a cow shed in Nebraska.” Woo must also consider the flip-side of strong security. Given that the “hard” Olympic and convention sites will be under tight security, he worries that terrorists might attack targets on the periphery, such as restaurants and bars, that are less-protected, or at remote locations. Woo said this tactic of hitting “soft” locations was evident in the Madrid train bombings and is expected to be part of terrorists’ future strategy. If something works, they are more likely to try it again.

“It’s a sparring contest between Al Quaeda and defense capabilities,” Woo explained. “If they can’t get close but want to strike at that time, their activities might be deflected to ‘softer’ targets.”

In addition to taking unprecedented security measures, organizers of this summer’s big events have purchased insurance in case all prayers and security efforts fail.

Organizers spent about $2.6 million on insurance for the DNC, according to David Passafaro, president of the Boston 2004 host committee. That was about $1.3 million less than originally budgeted. Boston 2004 paid roughly $2.4 million for its $100 million general liability insurance and another $145,000 in case the convention was cancelled. The premium for adding terrorism coverage was about $86,000, according to spokesperson Karen Grant, a lower price than the committee expected. “It was a no-brainer,” Passafaro said of the terror protection.

For the first time, the International Olympic Committee (IOC) has taken out cancellation insurance. The $170 million policy covers the risk of the games being called off because of war, terrorism, earthquakes or flooding.

Officials with the RNC have been reluctant to disclose their insurance.

Meanwhile, Woo’s concern over “soft” targets appears to be reflected in sales of terrorism coverage to businesses outside the DNC and RNC “hard” centers. Brokers in Boston and New York City report more property owners are buying.

“We said to them: ‘Your policy is coming up for renewal, the convention is coming up, and now is the time to buy terrorism insurance,'” said Mike Chapman, of Hub New England in Wilmington, Mass., part of Hub International.

Chapman told Insurance Journal that out of 25 risks with more than $25 million in property within one mile of the FleetCenter, 17 bought the coverage. Eight had already purchased it, and an additional nine added it at renewal.

According to Damian Testa, a broker with Kaye Insurance Associates in New York, also part of Hub International, terrorism insurance has become the norm for property owners in the heart of Manhattan since Sept. 11. But with the coming of the RNC, more clients across Manhattan and into New Jersey are buying.

“When you get away from the business section of town, now they are buying it,” Testa told Associated Press. “A year ago, these people said, ‘It’s not going to happen here. Now they’re saying, ‘Why put myself at risk, when it’s just about a 20 percent higher cost on my premium?'”