Tom LaTourrette

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

Terrorism Risk Modeling for Intelligence Analysis and Infrastructure Protection

2.7 billion to

Characterizing National Exposures to Infrastructure from Natural Disasters: Data and Methods Documentation

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.

Modeling Terrorism Risk to the Air Transportation System

This paper discusses the use of the Probabilistic Terrorism Model developed by Risk Management Solutions, Inc. (RMS) to evaluate terrorism risk liability. Three applications of the model are reviewed. The report applies the RMS Probabilistic Terrorism Model to compare the risk of terrorist attacks across various urban areas, to assess terrorism risks within a specific metropolitan area, and to target and enhance analysis of intelligence information. The RMS model is widely used in the insurance industry and therefore it can provide relevant data on how insurance-industry models can be used by the U.S. Department of Homeland Security (DHS). Other considerations covered in the report include decision support for resource allocation and development of standardized profiles for terrorism risk in selected cities.

Modeling Terrorism Risk to the Air Transportation System: An Independent Assessment of TSA's Risk Management Analysis Tool and Associated Methods

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