Probabilistic Risk Analysis and Terrorism Risk

Since the terrorist attacks of September 11, 2001, and the subsequent establishment of the U.S. Department of Homeland Security (DHS), considerable efforts have been made to estimate the risks of terrorism and the cost effectiveness of security policies to reduce these risks. DHS, industry, and the academic risk analysis communities have all invested heavily in the development of tools and approaches that can assist decisionmakers in effectively allocating limited resources across the vast array of potential investments that could mitigate risks from terrorism and other threats to the homeland. Decisionmakers demand models, analyses, and decision support that are useful for this task and based on the state of the art. Since terrorism risk analysis is new, no single method is likely to meet this challenge. In this article we explore a number of existing and potential approaches for terrorism risk analysis, focusing particularly on recent discussions regarding the applicability of probabilistic and decision analytic approaches to bioterrorism risks and the Bioterrorism Risk Assessment methodology used by the DHS and criticized by the National Academies and others.     

Contemporary Terrorism: Risk Perception in the London Options Market

Previous studies have a demonstrated a linkage between terrorist attacks and the operation of financial markets. This article focuses on terrorist events carried out over the last five years and examines how they have been perceived among participants on the London financial market. Data from the London options market suggest a high degree of sensitivity to these events. We argue that this sensitivity reveals a vulnerability in the financial markets should the recent trends in terrorist activity continue.     

A Perspective: Risk Analysis as a Tool for Reducing the Risks of Terrorism

The destruction by terrorists of the twin towers of the World Trade Center and major damage wrought to the Pentagon on September 11, 2001, followed closely by the bioterrorist anthrax attacks via the mails raised the question of whether risk analysis might have a place in defending the United States against terrorist attacks. After first reviewing the multifaceted nature of terrorism and the reasons it is likely to become endemic in world society in the long term, just as other areas of crime are endemic, this article surveys several fields of risk analysis, finding possible short- and long-term uses of risk analysis. The areas chiefly considered are: risk communication and chemical, biological, and technological risk analysis. Broad policy and other uses are also considered. The author finds that risk analysis has already played some role, perhaps informally, but he sees the possibility for a much larger, formal one, a role that is centrally important for the present and future of the United States and the world.     

Relative Risk Perception for Terrorism: Implications for Preparedness and Risk Communication

Terrorism presents a significant risk that is often approached at public policy, infrastructure, or emergency management level. Public perceptions of the likelihood of terrorist events, and how this may relate to individual preparedness, are not always extensively examined. The tendency to think that negative events are less likely to happen to oneself than to the average person is known as optimism bias. Optimism bias is relevant to perceptions of terrorism, because it is thought to be related to a reduction in precaution use. Using an online survey of 164 participants, this study aimed to determine whether Sydney residents thought they had a lower likelihood of experiencing terrorist events than other Australians. Significant optimism bias was observed for witnessing terrorist events, but not for personally experiencing terrorist events. In addition, Sydney residents tended to think that terrorist attacks were more likely to occur in Sydney than another major Australian city in the next five years. At the same time, household and workplace preparedness for terrorism was quite low, as was awareness of emergency strategies in the central business district. Perceptions of high likelihood of terrorism happening in one's own city, yet low preparedness present a challenge for risk communication and emergency management strategies. The diversity of possible terrorist targets, and the simple plans that can moderate the effects of a disaster may need to be emphasized in future anti‐terrorism initiatives.     

Recollection Bias and Its Underpinnings: Lessons from Terrorism Risk Assessments

Recollection bias is the phenomenon whereby people who observe a highly unexpected event hold current risk beliefs about a similar event that are no higher than their recollection of their prior beliefs. This article replicates and extends the authors’ previous study of recollection bias in relation to individuals’ perceptions of the risks of terrorism attacks. Over 60% of respondents in a national U.S. sample of over 900 adults believe that the current risk of a future terrorist attack by either an airplane or in a public setting is no higher than they recall having believed, respectively, before the 9/11 attack and before the Boston Marathon bombing. By contrast, a rational Bayesian model would update to a higher currently assessed risk of these previously uncontemplated events. Recollection bias is a persistent trait: individuals who exhibited this bias for the 9/11 attack exhibited it for the Boston Marathon bombing. Only one‐fifth of respondents are free of any type of recollection bias. Recollection bias is negatively correlated with absolute levels of risk belief. Recollection bias in relation to highly unexpected terrorist events—the belief that perceived risks did not increase after the surprise occurrence—dampens support for a variety of anti‐terrorism measures, controlling for the level of risk beliefs and demographic factors. Persistent recollection bias for both 9/11 and the Boston Marathon bombing is especially influential in diminishing support for protective policy measures, such as surveillance cameras in public places. Given that public attitudes influence policy, educating the public about risk is critical.     

Using Probabilistic Terrorism Risk Modeling for Regulatory Benefit-Cost Analysis: Application to the Western Hemisphere Travel Initiative in the Land Environment

This article presents a framework for using probabilistic terrorism risk modeling in regulatory analysis. We demonstrate the framework with an example application involving a regulation under consideration, the Western Hemisphere Travel Initiative for the Land Environment, (WHTI‐L). First, we estimate annualized loss from terrorist attacks with the Risk Management Solutions (RMS) Probabilistic Terrorism Model. We then estimate the critical risk reduction, which is the risk‐reducing effectiveness of WHTI‐L needed for its benefit, in terms of reduced terrorism loss in the United States, to exceed its cost. Our analysis indicates that the critical risk reduction depends strongly not only on uncertainties in the terrorism risk level, but also on uncertainty in the cost of regulation and how casualties are monetized. For a terrorism risk level based on the RMS standard risk estimate, the baseline regulatory cost estimate for WHTI‐L, and a range of casualty cost estimates based on the willingness‐to‐pay approach, our estimate for the expected annualized loss from terrorism ranges from $2.7 billion to $5.2 billion. For this range in annualized loss, the critical risk reduction for WHTI‐L ranges from 7% to 13%. Basing results on a lower risk level that results in halving the annualized terrorism loss would double the critical risk reduction (14–26%), and basing the results on a higher risk level that results in a doubling of the annualized terrorism loss would cut the critical risk reduction in half (3.5–6.6%). Ideally, decisions about terrorism security regulations and policies would be informed by true benefit‐cost analyses in which the estimated benefits are compared to costs. Such analyses for terrorism security efforts face substantial impediments stemming from the great uncertainty in the terrorist threat and the very low recurrence interval for large attacks. Several approaches can be used to estimate how a terrorism security program or regulation reduces the distribution of risks it is intended to manage. But, continued research to develop additional tools and data is necessary to support application of these approaches. These include refinement of models and simulations, engagement of subject matter experts, implementation of program evaluation, and estimating the costs of casualties from terrorism events.     

On the Complex Quantification of Risk: Systems‐Based Perspective on Terrorism

This article highlights the complexity of the quantification of the multidimensional risk function, develops five systems‐based premises on quantifying the risk of terrorism to a threatened system, and advocates the quantification of vulnerability and resilience through the states of the system. The five premises are: (i) There exists interdependence between a specific threat to a system by terrorist networks and the states of the targeted system, as represented through the system's vulnerability, resilience, and criticality‐impact. (ii) A specific threat, its probability, its timing, the states of the targeted system, and the probability of consequences can be interdependent. (iii) The two questions in the risk assessment process: “What is the likelihood?” and “What are the consequences?” can be interdependent. (iv) Risk management policy options can reduce both the likelihood of a threat to a targeted system and the associated likelihood of consequences by changing the states (including both vulnerability and resilience) of the system. (v) The quantification of risk to a vulnerable system from a specific threat must be built on a systemic and repeatable modeling process, by recognizing that the states of the system constitute an essential step to construct quantitative metrics of the consequences based on intelligence gathering, expert evidence, and other qualitative information. The fact that the states of all systems are functions of time (among other variables) makes the time frame pivotal in each component of the process of risk assessment, management, and communication. Thus, risk to a system, caused by an initiating event (e.g., a threat) is a multidimensional function of the specific threat, its probability and time frame, the states of the system (representing vulnerability and resilience), and the probabilistic multidimensional consequences.     

Analytic Bayesian Solution of the Two-Stage Poisson-Type Problem in Probabilistic Risk Analysis

The basic purpose of probabilistic risk analysis is to make inferences about the probabilities of various postulated events, with an account of all relevant information such as prior knowledge and operating experience with the specific system under study, as well as experience with other similar systems. Estimation of the failure rate of a Poisson-type system leads to an especially simple Bayesian solution in closed form if the prior probability implied by the invariance properties of the problem is properly taken into account. This basic simplicity persists if a more realistic prior, representing order of magnitude knowledge of the rate parameter, is employed instead. Moreover, the more realistic prior allows direct incorporation of experience gained from other similar systems, without need to postulate a statistical model for an underlying ensemble. The analytic formalism is applied to actual nuclear reactor data.     

A Social-Cognitive Perspective of Terrorism Risk Perception and Individual Response in Canada

The volume of research on terrorism has increased since the events of September 11, 2001. However, efforts to develop a contextualized model incorporating cognitive, social-contextual, and affective factors as predictors of individual responses to this threat have been limited. Therefore, the aim of this study was to evaluate a series of hypotheses drawn from such a model that was generated from a series of interviews with members of the Canadian public. Data of a national survey on perceived chemical, biological, radiological, nuclear, and explosives (CBRNE) terrorism threat and preparedness were analyzed. Results demonstrated that worry and behavioral responses to terrorism, such as individual preparedness, information seeking, and avoidance behaviors, were each a function of cognitive and social-contextual factors. As an affective response, worry about terrorism independently contributed to the prediction of behavioral responses above and beyond cognitive and social-contextual factors, and partially mediated the relationships of some of these factors with behavioral responses. Perceived coping efficacy emerged as the cognitive factor associated with the most favorable response to terrorism. Hence, findings highlight the importance of fostering a sense of coping efficacy to the effectiveness of strategies aimed at improving individual preparedness for terrorism.     

Psychometric and Demographic Predictors of the Perceived Risk of Terrorist Threats and the Willingness to Pay for Terrorism Risk Management Programs

A 2009 national telephone survey of 924 U.S. adults assessed perceptions of terrorism and homeland security issues. Respondents rated severity of effects, level of understanding, number affected, and likelihood of four terrorist threats: poisoned water supply; explosion of a small nuclear device in a major U.S. city; an airplane attack similar to 9/11; and explosion of a bomb in a building, train, subway, or highway. Respondents rated perceived risk and willingness to pay (WTP) for dealing with each threat. Demographic, attitudinal, and party affiliation data were collected. Respondents rated bomb as highest in perceived risk but gave the highest WTP ratings to nuclear device. For both perceived risk and WTP, psychometric variables were far stronger predictors than were demographic ones. OLS regression analyses using both types of variables to predict perceived risk found only two significant demographic predictors for any threat—Democrat (a negative predictor for bomb) and white male (a significant positive predictor for airline attack). In contrast, among psychometric variables, severity, number affected, and likelihood were predictors of all four threats and level of understanding was a predictor for one. For WTP, education was a negative predictor for three threats; no other demographic variables were significant predictors for any threat. Among psychometric variables, perceived risk and number affected were positive predictors of WTP for all four threats; severity and likelihood were predictors for three; level of understanding was a significant predictor for two.