Policy Research Institute for Land, Infrastructure, Transport and Tourism. Ministry of Land, Infrastructure, Transport and Tourism

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Survey about the risk management of large scale disaster in the transportation sector

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The purpose of the research : Outline

The simultaneous multiple terrorist attack in New York in September 11 2001 caused great loss of human life. After the terrorist act a large sum of money was paid, which affected the Insurance Industry. For the victims of terrorism there were many deductions and exclusions in their insurance service, such as rise in the insurance expense. In U.S.A a law was established Terrorism Risk Insurance Act 2002, in which the government will bear part of the financial damage caused to the Insurance Industry. In Europe, Spain and England have consolidated Insurance Risk Pool Scheme for financial damages due to terrorist act, which has actually been used. Even in Germany similar type of scheme has been consolidated.Furthermore, because the Terrorism Risk Insurance Act 2002 is a short term law, there are arguments starting from business management scholars as to what appropriate risk hedge schemes should be or what the government participation should be. In OECD there have been discussions in similar topics.

Public transport, communication, power supply, water supply, the necessary and indispensable life line net work is thought to be easy targets for terrorist attacks. After September 11 terrorist attack in New York, terrorists have attacked trains in Madrid, subways in Moscow and London. In the case where public services comes under terrorist attack, people expect the above mentioned services to recover a soon as possible for daily life to return to normal. In case of transportation companies, stopping business operations would create a shift in the commuter transport from a mode that is attached from another, besides the decrease in profit; the money required for fast recovery would have a tremendous effect on the business. Since the September 11 terrorist attack in U.S.A, while many discussions have focused only on measures for preventions, there has been no conclusion as to how to cope with the disaster after its occurrence. At present it seems that each country is groping about individually.

With the above in mind, in this research, we conducted a general survey as to what risk hedge techniques other countries are applying in case of terrorist attack and the merits and demerits of those measures and reviewed the appropriate role of government participation.


issue

Reports No.63/2006 Feb.

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