Guiding Resource Allocations Based on Terrorism Risk

Abstract

Establishing tolerable levels of risk is one of the most contentious and important risk management decisions. With every regulatory or funding decision for a risk management program, society decides whether or not risk is tolerable. The Urban Area Security Initiative (UASI) is a Department of Homeland Security (DHS) grant program designed to enhance security and overall preparedness to prevent, respond to, and recover from acts of terrorism by providing financial assistance for planning, equipment, training, and exercise needs of large urban areas. After briefly reviewing definitions of terrorism risk and rationales for risk-based resource allocation, this article compares estimates of terrorism risk in urban areas that received UASI funding in 2004 to other federal risk management decisions. This comparison suggests that UASI allocations are generally consistent with other federal risk management decisions. However, terrorism risk in several cities that received funding is below levels that are often tolerated in other risk management contexts. There are several reasons why the conclusions about terrorism risk being de minimis in specific cities should be challenged. Some of these surround the means used to estimate terrorism risk for this study. Others involve the comparison that is made to other risk management decisions. However, many of the observations reported are valid even if reported terrorism risk estimates are several orders of magnitude too low. Discussion of resource allocation should be extended to address risk tolerance and include explicit comparisons, like those presented here, to other risk management decisions.

Operational Models of Infrastructure Resilience

“…Many papers follow, (31)(32)(33)(34)(35) often using simplified models that rely on the definition "Risk = Threat (T) × Vulnerability (V) × Consequence (C)," where subject matter experts assess the threat and vulnerability terms as probabilities, and the consequence term in units of, for example, economic replacement cost, or fatalities. (36,37) When applied to critical infrastructure, the notion is to assess adversary intent as "threat" (38) ) and then rely on such assessments for proposed methods to optimize defense. (39,40) DHS has promoted PRA, including models based on the (T,V,C) construct, for assessing the threats posed by intelligent adversaries in a terrorist attack.…”

Static and dynamic resource allocation models for recovery of interdependent systems: application to the Deepwater Horizon oil spill

“…An analysis of the Department of Homeland Security's fiscal year 2004 budget reveals that the department's allocation to urban areas to protect those areas from terrorism significantly differs from an allocation based on the risk of a terrorist attack (Willis 2007). As Willis (2007) acknowledges, the decision should be based on where the money reduces risk the most rather than on which areas carry the most risk, but data do not exist to estimate the functional relationship between investing in protection and risk reduction. This latter point applies to protection against natural disasters as well.…”

Risk‐Based Decision Making for Terrorism Applications

“…Additionally, several studies look at resource allocation. (10)(11)(12) A counterintuitive result of prior research is that resource allocation to the greatest risk may not be the most cost-effective option. If there are smaller risks that can be entirely eliminated for a small amount of money, these investments, even if directed at small risks, could be the most cost-effective option from a benefit-cost ratio perspective.…”