How Risk Management Pros Are Working to Stop the Next Mass Shooter

The Mandalay Bay hotel attack in Las Vegas last October lent fresh urgency to the task of risk managers across various industries to minimize the potential of a disastrous mass shooting event.
By: | October 15, 2018 • 6 min read

Despite several decades during which mass shootings have become a regular occurrence, the attack at Las Vegas’s Mandalay Bay Hotel last October traumatized the country.

Yet again, questions were asked on whether public places can be better defended against gunmen; in addition to Mandalay Bay, targets in recent years include a movie theater (Aurora), a nightclub (Orlando), an airport (Fort Lauderdale), multiple churches and dozens of schools.

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Around the world, the vulnerability of busy venues to mass shootings has been regularly exposed in the 21st century. A decade has passed since a series of gun attacks and bombings in Mumbai over four days in November 2008, when terrorists targeted 12 locations including two hotels, a train station and a restaurant. A lengthy siege at the Taj Mahal Hotel left 164 dead and hundreds wounded.

Despite a growing body of knowledge on how to prepare for and limit the impact of gun attacks, they appear to be occurring with increasing regularity. As one risk manager acknowledges, “bad people will always find a way to do bad things.”

Following the Mumbai attack, local hotels introduced a policy requiring guests to drop off their baggage at a perimeter outside the building, where a checking system similar to airport security could examine the contents.

“The societal barrier for violent acts has steadily lowered as individuals come to regard violence as a solution to their problems, while the average age of perpetrators is also lower.” — Hart S. Brown, COO, Firestorm Solutions

Similarly, in the weeks following the Mandalay Bay killings, a group of seven casino and hotel risk operators formed a working group to meet regularly and discuss how to control such events. In a blog posted last January, Marsh’s U.S. hospitality, sports and entertainment practice leader, Christian Ryan, reported evidence of several major changes across the hotel, gaming and entertainment industries.

Those changes could be summarized as “checking out who’s checking in” and include training staff at all levels to speak out should they detect any suspicious activity — even if seemingly trivial. Even the “do not disturb” and “occupied” signs regularly hung on hotel doors can be worth noting if, for example, a room has remained unchecked for several days. Staff training also focuses on the types of luggage that guests may carry, helping them discern between a golf bag and a gun bag.

Making greater use of CCTV is another trend, along with having a more evident police and security presence in both the front and back of the premises.

As one risk consultant observes, high-profile security was a factor in the June 2016 attack on the Pulse nightclub in Orlando. The subsequent investigation revealed the gunman initially targeted other locations but was deterred by the presence of police officers and finally chose Pulse because of its relative lack of security.

Valuable Risk Management Resources

Two sources of information and recommendations for risk managers singled out by Chandra Seymour, a senior vice president within the Marsh Risk Consulting’s reputational risk and crisis management group, are the websites of the Department of Homeland Security (DHS) and the Occupational Safety and Health Administration.

Chandra Seymour, senior vice president, Marsh Risk Consulting’s reputational risk and crisis management group

“All the pieces are there, which risk managers can use in putting together their own individual risk mitigation program using what they already have, and there is a hotline available for further advice,” said Seymour.

The DHS’s network of fusion centers for pooling information on potential threats is another valuable source, confirms the risk manager for one major hospitality and gaming company. “We work closely with the DHS, and it is a two-way communication. They inform us when they become aware of a possible threat and we inform them of suspicious activities that they investigate,” he said.

“They also provide support for ‘soft target’ industries like hospitality and entertainment to review response plans and make recommendations for improvements.”

The risk manager added that prior to the Mandalay Bay attack, hospitality companies were members of various professional organizations such as American Hotel & Lodging Association’s risk management committee and safety & security committee, ASIS International (formerly the American Society for Industrial Security), and other professional groups.

“Since that incident, informal groups have formed that are made up of risk, safety and security professionals from the same area,” he said.

“It’s an opportunity for companies to not only look inward at their own practices but to also discuss what others are doing and thinking about. It’s common to include local law enforcement as well as other agencies such as DHS to participate. The result isn’t so much a ‘checklist’ for risk managers but innovative and thoughtful best practices that can be implemented across the sector without compromising our business mission.”

However, as Hart S. Brown, with crisis risk management firm Firestorm Solutions acknowledges, the incidence of mass shootings is likely to remain high. “The societal barrier for violent acts has steadily lowered as individuals come to regard violence as a solution to their problems, while the average age of perpetrators is also lower.”

Hart S. Brown, COO, Firestorm Solutions

The scope for pre-emptive action is limited. “A threat in itself isn’t enough to constitute a federal crime and local police departments lack the time and resources to follow up a less-than-concrete threat. Responsibility then rests with either the individual or the organization to act to prevent it from developing further,” Brown said.

Coverage Questions

Marsh reported that real estate and hospitality risk managers reviewed their general liability limits in the months following the Las Vegas attack, increasing them on average by 20 percent to 30 percent. The big question, as the incidence of workplace violence increases, is whether commercial general liability policies will respond to incidents such as a mass shooting.

Insurers are generally reluctant to comment, although according to one broker: “We understand that some general liability carriers are reviewing their policy wordings in order to clarify whether or not claims arising from mass shootings/active shooter events are covered under their policies. We’re not aware of any GL carriers amending their policies to cover such events.”

The specific issue of liability arising from Mandalay Bay is becoming increasingly contentious. In July, it was reported that the hotel’s owner MGM Resorts International, which is potentially liable for the 58 deaths and hundreds of injuries, was suing a total of 1,977 individuals involved in the shooting.

The lawsuits, filed by MGM in Nevada and California federal courts, aim to move victims’ Nevada-state court lawsuits into federal courts and seek a declaratory judgment “that the MGM parties cannot be held liable to defendants for deaths, injuries or other damages arising from [gunman Steven] Paddock’s attack.”

The potential gaps in coverage identified even when general liability, terrorism, workers’ compensation and property insurance policies are combined has seen growing demand for the specific active shooter/active assailant insurance products developed by insurers such as Beazley, Hiscox, XL Catlin and Aspen, reports Tarique Nager, terrorism placement advisory leader in Marsh’s property practice.

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Chris Parker, Beazley’s political violence kidnap and ransom underwriter, confirms the company developed its Deadly Weapon Protection (DWP) insurance coverage anticipating growing demand for a specific liability insurance covering mass shooting events. Since its launch, the product has been regularly enhanced in response to feedback from clients and brokers.

“The DWP product is now at a point where it offers broad coverage, includes extensive pre- and post-event crisis management services and is priced at a point that is affordable and represents value for the money,” Parker said. “This has resulted in a three-fold increase in the number of inquiries we’ve received already this year compared to 2017 and the number of clients buying policies has more than doubled.

“Unfortunately, the number of mass shootings in the U.S. isn’t abating. Consequently, more insurance carriers are releasing their own versions of the DWP product as demand for the coverage increases.” &

Graham Buck is a UK-based writer and has contributed to Risk & Insurance® since 1998. He can be reached at riskletters.com.

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]