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Terrorism Policy Research

Terrorism Risk Management Theory and Policy

Background

The development of risk management tools for natural catastrophes has relied upon numerical methods that have been made feasible by the computational power of computers, and advances in mathematics, meteorology and geology. Comparable mathematical methods in terrorism research are in their infancy and will be part of the research agenda of the RAND Center for Terrorism Risk Management Policy.

RAND Research Goals

The Center's goal will be to improve the ability to mathematically assess exposure to terrorist attacks. In addition to peer-reviewed journal articles and RAND documents, we will publish policy papers accessible to the general public to improve the ability to establish an affordable and stable market for terrorism insurance (if possible) and to improve the prioritization of security resources locally and nationally.

A critical risk management policy issue that we intend to analyze is the implications of the displacement of terrorist attack risk to less-fortified targets when security is improved at a particular target. This problem sets terrorism risk apart from other natural catastrophe risks, and therefore poses a challenge to the modeling of terrorism risk. This issue has direct policy implications:

• If the federal government prioritizes security at government buildings, does this reduce overall risk of terrorist attack or only increase risk to commercial properties?
• Which government policies work to suppress the terrorist threat, and which work in ways that might augment terrorists’ motivations and capabilities?
• What resource constraints do terrorists face and how might these constraints affect their operations?
• How does the structure of government involvement in terrorism insurance encourage alternative prioritization of security resources? Can policies be designed to mitigate risk displacement, such as subsidies for particular types of targets or industries that will improve overall homeland security?

We expect that this aspect of our research agenda will have relevance to both private and public decisionmakers, from companies making decisions on investment in security and insurance, to local governments as well as the federal government.