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Terrorism still is not a priority issue among most European risk managers.

Terrorist attacks throughout Europe are not generally aimed at companies, risk managers point out. And insurance coverage for terrorism risks is available in most countries. So while some large companies have heightened security practices, in general terrorism has not been a driving force for implementing new risk management procedures.

The stance of continental European risk managers is contrary to their colleagues in the United Kingdom, where a spate of Irish Republican Army bombs during the 1990s aimed at economic targets has raised British risk managers' awareness of terrorism and led to reinsurers withdrawing coverage for damage related to terrorist acts (see story, page G6).

Terrorism "is not a corporate problem," said Thierry van Santen, the Paris-based corporate risk manager of French yogurt manufacturer Groupe Danone.

Currently, terrorism in France is "not directed against companies with manufacturing plants. We do not see it as a big exposure," said Mr. van Santen.

As a result, Mr. van Santen, like most other French risk managers, takes no additional risk management measures to counter the threat of terrorism. Existing loss-prevention techniques and disaster-recovery programs all would respond to a terrorist incident.

Guy Lamond, risk manager for Paris-based nuclear products manufacturer Framatome, agreed that terrorism in France is not currently directed against corporations.

"The Islamic terrorism we have seen recently is not against companies but aimed to kill" individuals, said Mr. Lamond, vp of the Assn. pour le Management des Risques et des Assurances de l'Entreprise the French risk management association, and chairman of the International Federation of Risk & Insurance Management Assns.

France has long been subject to terrorist attacks by radical Arab groups due to its prominent role in Middle Eastern and North African politics.

Algerian Islamic extremists opposed to France's political and financial backing for the Algerian regime are prime suspects for a series of bombings in public places in the Paris and Lyon areas last summer, according to Control Risks.

Among those incidents: a bomb attack at Paris' Port Royal station in December 1996 and a bomb explosion outside a residence for U.S. students at the Citee University in southern Paris last month, according to Control Risks, a consulting firm specializing in security and terrorism.

As a result of the recent attacks,"the authorities have stepped up security measures," including deploying extra police at airports and in central Paris, according to Control Risks. The security specialist predicts that "further attacks are likely to continue to take the form of bombings in public places in a bid to maximize disruption, public unease and embarrassment to the government."

Control Risks' assessment is that "attacks could single out state targets and the premises of businesses investing in Algeria."

Mr. Lamand agreed that the French government has stepped up surveillance and security in Paris in light of the recent bombings.

He also pointed out that many big companies with offices in Paris have stepped up security, with closer scrutiny of visitors and the introduction of camera and other surveillance systems.

However, both Messrs. Lamand and van Santen said they did not anticipate any insurance rate rises as a result of the bombings. Terrorism coverage is included in French property/casualty insurance programs except on the island of Corsica, due to the activities of the Corsican National Liberation Front.

Compensation for individual victims of terrorist attacks comes from a state fund, the Fonds de Guarantie, which is financed by a levy on all non-life insurance premiums in France.

France's southern neighbor Spain has its own brand of terrorism, namely the Basque separatist group ETA.

According to Control Risks, recent attacks staged by ETA include the fatal shooting of a supreme court judge in Madrid and a car bomb explosion outside a wine-producing firm in San Sebastian, causing slight damage.

Unlike most European countries, terrorism is excluded in domestic Spanish property/casualty insurance coverage. Terrorism and other political and social insurrection is covered instead by the state-organized Spanish Consorcio, which also provides coverage for abnormal natural phenomena, including earthquakes, floods and volcanic eruptions. Reserves are funded through a surcharge levied by Spanish insurers in the premiums for certain commercial classes of business.

Surprisingly, Spanish risk managers do not regard terrorism as a major threat to industry.

Terrorism is "not a major risk. We regard pollution as a much bigger risk, for example," noted Vicente Martin, insurance manager for Madrid-based Endesa, an electric utility.

Generally, terrorism is seen as a risk only in the northeast, or Basque area, of Spain, he noted.

Also, ETA traditionally has not focused on economic targets.

Terrorism is not a "major concern for companies even though (Spain) has a big problem with terrorists," agreed Felipe Gangoiti, chief executive of broker Alexander & Alexander Madrid.

Although A&A always looks at terrorism when performing risk management surveys for Spanish clients and puts in place disaster-recovery plans, the risk is considered minimal, he noted.

However, in a brief filed for Business Insurance Control Risks warns that the "risk to business is that ETA may decide to stage bigger, more discriminate attacks in a bid to put pressure on the government" because of the success the IRA has had.

The consultant's memo states that "ETA-linked politicians in mid-January warned of 'great suffering' in 1997 as a result of the deadlock between ETA and the government."

ETA's future targets may include transportation hubs, such as airports; commercial areas; infrastructure, such as oil and gas pipelines or electric power facilities; and French businesses, in retaliation for France's cooperation with Spain against the ETA, Control Risks warns.

Previous ETA attacks have singled out state-related targets, "but the group could seek to damage the state's economic interests by undermining the environment for investment," predicted Control Risks.

Across the continent, Turkey also has its own terrorist problems, primarily stemming from the Kurdish separatist movement.

The PKK began its campaign against the Turkish government in 1984, and by 1996 more than 21,500 people had lost their lives, according to Control Risks.

Kurdish demands range from improved civil rights and ethnic recognition to a separate Kurdish nation-state.

The PKK's leadership is based in Lebanon, Syria and Europe, and its guerrillas operate mainly in remote mountainous areas, from where they launch roadblock ambushes against security forces and, increasingly, civilians.

The insurgency has affected foreign businesses in Kurdish areas, and as a result, few companies operate in remote parts of the region, according to Control Risks.

Despite attacks on businesses in the past, Control Risks predicts future attacks will focus more on tourist activities than business activities.

On Feb. 19 police defused a large bomb, planted near a clothing store in the heart of Istanbul's commercial district, which police believe was planted by the Kurdish Workers' Party, or PKK.

The PKK has "periodically bombed crowded public places" during the past five years in attacks "intended to attract international media attention," according to Control Risks.

Control Risks thinks recent incidents, including a large bomb defused Jan. 21 at Istanbul's main railway station, may be the start of a fresh campaign of sporadic bombings.

The security consultant, which has offices around the world, said the attacks "are likely to follow the PKK's previous pattern (with) prime targets including crowded public places, locations near or inside tourist sites."

However, "there is no reason to suspect that the PKK will broaden its campaign to include foreign business premises," it notes.

Indeed, European risk managers with operations in Turkey recognize the PKK threat but are not overly anxious about the region.

Groupe Danone has an operation in Turkey, but Mr. van Santen said the operation is "not faced with a direct threat of terrorism." Meanwhile, the group has no problem obtaining insurance coverage for Turkey, he added.

Italian tire and cable manufacturer Pirelli S.p.A. also had no difficulty obtaining insurance coverage for its Turkish operation, said Maurizio Castelli, manager of risk management for Milan-based Pirelli's European operations.

"Turkey is risky and not very stable, but we have had no problems" relating to terrorism there, he said.

In fact, the Italian manufacturer does not regard terrorism as a big risk for any of its European operations, said Mr. Castelli. However, Mr. Castelli noted that some operations "where we are more concerned about terrorism have particular security procedures," although he refused to specify where and what the procedures are.

The only area of concern is the lack of flexible insurance coverage available for U.K.-based operations, he noted, adding however, that insurance coverage is improving even for U.K. risks (see related story).

In Italy, terrorism "is not right now perceived as a major issue" except for Sicily, where Pirelli has no operations, he said.

Meanwhile, Pirelli's operations in Spain are located in Catalonia, which is not an area prone to terrorism, said Mr. Castelli.

Although Mr. Castelli concedes that terrorism in France "could be of concern in the future," for the time being, the company is not particularly concerned because the terrorism in France is mostly in the big cities and Pirelli's factories are not located in these areas.

Fellow Italian risk manager Giovanni Furlan, insurance manager with the clothing company Benetton Group S.p.A., agreed that terrorism is not currently regarded as a major risk in Italy.

"Where we operate in the northeast of Italy, terrorism does not touch us," he said.

Meanwhile, the company's operations in the center of France and in Barcelona, Spain, have "no problem" with the threat of terrorism.

Mr. Furlan, who is based in Treviso, near Venice, also pointed out that the insurance market for terrorist coverage is "very soft" throughout Europe.