Catastrophic Risk Management
ICJ seeks to improve the complex system of public and private compensation for losses of life and property caused by natural disasters and terrorist attacks.
Disasters such as earthquakes, hurricanes, tsunamis, large-scale industrial accidents, and terrorist attacks kill thousands each year worldwide. In addition to the obvious human toll, disasters can have enormous economic consequences, destroying public and private infrastructure, disrupting government services, harming the environment, and reducing a populations' productivity and confidence.
Compensation for catastrophic losses of life and property comes from insurance companies, the court system, government compensation programs, philanthropic institutions, and business assistance to employees. It is a complex system and the balance of public and private compensation varies by the type of disaster and its magnitude.
This body of work offers analysis of the strengths and weakness of the current system in different contexts. It identifies who receives compensation, how it is allocated, who pays, and what incentives (and disincentives) are created by the system to mitigate risk. The research also describes how changing the balance between private and public sources of compensation would affect outcomes.
Congress enacted the Terrorism Risk Insurance Act (TRIA) in 2002, in response to terrorism insurance becoming unavailable or extremely costly in the wake of the 9/11 attacks. TRIA is set to expire at the end of 2014, and Congress is considering the appropriate government role in terrorism insurance markets. This policy brief examines the potential national security implications of allowing TRIA to expire.
Making Good Decisions Without Predictions: Robust Decision Making for Planning Under Deep Uncertainty — 2013
Quantitative analysis is often indispensable to sound planning. But with deep uncertainty, predictions can lead decisionmakers astray. Robust Decision Making supports good decisions without predictions by testing plans against many futures.
Modeling Terrorism Risk to the Air Transportation System: An Independent Assessment of TSA's Risk Management Analysis Tool and Associated Methods — 2012
RAND evaluated a terrorism risk modeling tool developed by the Transportation Security Administration and Boeing to help guide program planning for aviation security. This tool — the Risk Management Analysis Tool, or RMAT — is used by TSA to estimate the terrorism risk-reduction benefits attributable to new and existing security programs, technologies, and procedures.
A study of the involvement of organized-crime and terrorist groups in product counterfeiting. Case studies of film piracy illustrate the problem of criminal — and perhaps terrorist — groups using this new high-payoff, low-risk way to fund their activities. Cooperation among law enforcement and governments worldwide is needed to combat intellectual-property theft, which threatens the global information economy, public safety, and national security.
Deterrence — a central feature of counterterrorism security systems and a major factor in the cost-effectiveness of many security programs — is not well understood or measured. This paper offers a framework for understanding how security systems may deter or displace attacks and how to measure the relative deterrent value of alternative systems. This framework may aid in attempts to achieve increased security benefits with limited resources.
This research brief summarizes an analysis of terrorism-insurance policy. The current law produces positive outcomes for conventional attacks but does not effectively address risks that nuclear, biological, chemical, or radiological attacks present.
What are the Terrorism Risk Insurance Act’s effects on the market for terrorism insurance? What would be the effect of enhancing provisions for nuclear, biological, chemical, and radiological (NBCR) attacks? The authors conclude that the program yields positive outcomes in a number of dimensions for conventional attacks and identify specific reforms that can improve results for NBCR attacks.
Trade-Offs Among Alternative Government Interventions in the Market for Terrorism Insurance: Interim Results — 2007
This briefing presents interim findings to inform the debate over extending the Terrorism Risk Insurance Act (TRIA). The results suggest that TRIA performs well on outcomes examined for conventional attacks but not as well for chemical, biological, radiological, or nuclear (CBRN) attacks, but adding a requirement for insurers to offer CBRN coverage is not an ideal solution.
The Victims of Terrorism: An Assessment of Their Influence and Growing Role in Policy, Legislation, and the Private Sector — 2007
Organized groups of victims’ families and friends have emerged since September 11, 2001, to become a powerful voice in U.S. counterterrorist policy and legislation. These groups were remarkably successful in getting the 9/11 Commission established and in getting the commission’s most important recommendations enacted. This report documents these groups and compares them to groups formed in response to other terrorist attacks.
High take-up rates for terrorism insurance or other forms of compensation for terrorism losses can enhance economic resilience after an attack and encourage national cohesion and post-event solidarity.
The pending expiration of the Terrorism Risk Insurance Act (TRIA) of 2002 is the impetus for this assessment of how TRIA redistributes terrorism losses. The authors find that the role of taxpayers is expected to be minimal in all but very rare cases and that, even with TRIA in place, a high fraction of losses would go uninsured in each of the attack scenarios examined.
How does the Terrorism Risk Insurance Act (TRIA) align with the evolving terrorism threat? Transnational and domestic terrorism trends reveal that TRIA does not provide adequate financial protection, particularly in the face of economically motivated...
Trends in Terrorism: Threats to the United States and the Future of the Terrorism Risk Insurance Act — 2005
The Terrorism Risk Insurance Act (TRIA) requires insurers to offer commercial insurance that will pay on claims that occur from a terrorist attack, and for losses on the scale of 9/11, TRIA provides a "backstop" in the form of free reinsurance. The authors describe the evolving terrorist threat with the goal of comparing the underlying risk of attack to the architecture of financial protection that has been facilitated by TRIA.
This study simulates the expected losses from three modes of terrorist attacks and shows how the Terrorism Risk Insurance Act (TRIA) would distribute the resulting losses.
Following the 9/11 terrorist attacks, the federal government adopted the Terrorism Risk Insurance Act (TRIA), which requires insurers to make terrorism coverage available to commercial policyholders. In exchange, the federal government will reimburse insurers for a portion of insured losses above a particular threshold. This paper frames the central issues in the debate over whether to extend, modify, or end TRIA, and explores the role of disaster insurance within a system for managing risks created by the possibility of terrorist attacks and compensating losses caused by those attacks.