One of the most affected sectors has been insurance, which has seen a marked rise in the premiums levelled on political risk since the fall of the World Trade Centre's twin towers and the launch of the US government's war against terrorism. Industry estimates put the cost of the 11 September events for insurance firms at more than $50,000 million, with a final figure expected to be even higher.

According to James Cunningham, associate director at Marsh Credit & Political Risk, insurers were already experiencing tough times prior to the tragic events in New York, with a high number of claims already requiring re-insurance. The implications for business in the Middle East are that insurers are becoming more selective about underwriting political risk.

Martin Stone, head of country and political risk at Deloitte & Touche, expressed his disappointment that security risks are rarely examined as seriously as other kinds of risk when making investment decisions. 'Risk is all about perception,' he said. 'And the Middle East is, wrongly, perceived as a risky political proposition.' From informal discussions with his customers, he found that the countries suffering most severely from poor risk perception were Syria, Algeria, Libya, Iran and Iraq, while Bahrain, the UAE, Tunisia and Jordan were perceived as low-risk investment destinations. He said that Saudi Arabia suffered a perception problem, being ranked by his customers alongside Yemen in terms of risk.

Turning to the energy sector, John Roberts, senior consultant at Methinks, warned of long-term economic risks inherent in current OPEC production policy. 'There is an assumption that OPEC will automatically increase production over the next 20 years as world demand increases and non-OPEC supplies deplete,' he said. 'But this is not based on calculations of what OPEC can and will supply. If it doesn't raise field investment to increase production capacity, political crises will lead to the oil price being too high for a long time.'

Companies were advised by Charles Bradley, managing director of DBA Risk Management, to adopt a more holistic approach to risk analysis. 'There are very high levels of analysis on the shop floor, but that is not replicated in the board room,' he said. 'A holistic, standardised approach should be adopted that encompasses political, technical and financial risk.'

Sir David Gore-Booth, special adviser to the chairman of HSBC and director of security services provider Group 4 Falck, said that despite the developments since 11 September, HSBC's mood and that of other companies was upbeat about the Middle East. 'We expect positive growth rates in the region,' he said. Sir David warned, however, that the long-term impact of the war on terrorism could have unpredictable consequences if its scope was broadened too far. He said that real security could only be achieved if key issues and root causes of alienation such as the Israeli-Palestinian conflict were addressed. 'The Crown Prince Abdullah plan is a vision,' he said. 'It is an important event because it is so simple and because it was publicly announced by Saudi Arabia.'

James Rainey and Nick Duggan, chief executive and international operations director respectively at UK security consultancy Genric, advised companies to adopt a wide range of measures from company to individual level to address security issues. They stressed that a long-term approach was essential in establishing a solid corporate security foundation in the Middle East. The consultants said that the failure to consider security risks could seriously affect businesses by causing disruption and exposing employees to danger with the high possibility of increasing operating costs.

Michael Knights, policy analyst at the Information Assurance Advisory Council, said that in terms of internet risk, the Middle East should not be regarded as a more dangerous place since 11 September. 'The threat of cyber attacks is not markedly different to those operating in and with the Middle East than to any other company,' he said, but cautioned firms to adopt higher internet security at times of high political tension in the region.