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Global Terrorism Risk
World Markets Analysis
Guy Dunn (guy.dunn@wmrc.com)
World Markets Research Centre
Global Terrorism Risk
Agenda
Definition of Terrorism
Analysis of Major Terrorist Attacks Since 1945– Location: regional split of attacks?– Targets: how often is business targeted?– Perpetrators: Islamic extremist or domestic?
Conclusions: Assessment of Risk Going Forward– Which sectors/countries are at greatest risk?– Findings of Global Terrorism Index
Questions & Answers
Global Terrorism Risk
World Markets Research Centre (www.wmrc.com)
Global Insight (formerly DRI-WEFA) company Provider of enhanced country risk intelligence Same-day Analysis, 5-year forecasts and Country Risk
Reports on 196 different countries – focusing on politics, economics, security, operational, tax and legal risks
Our focus is country risk analysis, modelling and forecasting 60 full-time analysts divided into six regional teams – backed
up by 120 in-country advisers/stringers 500 separate government, academic and corporate clients
located in 45 different countries worldwide
Global Terrorism Risk
WMRC’s country risks expertise
Country risks analysis on 196 countries Sovereign risks analysis on 196 countries Global Terrorism Index – 186 countries Corruption ratings provided to Transparency International on
186 countries Terrorism risks analysis on 186 countries provided to Aon 13-factor risk ratings provided for World Bank report on 186
countries Bespoke risk analysis work carried out for various clients
Global Terrorism Risk
WMRC’s Definition of ‘Terrorism’
‘Terrorism is the unlawful and premeditated use of violence intended to coerce or intimidate a government or civilian population as a means of advancing a political or ideological cause.’
Terrorism has 5 main components:– Violence– Premeditation– Ideology– Fear– Group or individual: sovereign states are not considered to be
terrorist entities.
Global Terrorism Risk
Scale of Terrorist Attacks Since 1945
Global Terrorism Risk
Major Terrorist Attacks Since –1945 (>50 casualties)
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Regional Split of Major Terrorist Attacks Since 1945
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Perpetrators of Major Terrorist Attacks Since 1945
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Total Terrorist Attacks Since 1981
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Terrorist Attacks 2003 - Fatalities
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Conclusions: Assessment of the Risk Going Forward
Will the number of terrorist attacks continue to grow? What is the risk of more indiscriminate attacks designed to
cause mass casualties? Who will be the main perpetrators of these attacks? To what extent will business be considered a legitimate
target? Are any sectors at particular risk of being targeted? Which regions/countries are most at risk?
Global Terrorism Risk
What is the Global Terrorism Index aiming to do?
Terrorism was always central to our security risk rating However, clients often considered it a peripheral threat:
– the impact was usually limited to just the targeted country– whilst tragic, most attacks were effectively small-scale
This changed after the attacks on 11 September:– business was specifically targeted– the indiscriminate nature of the attacks– the internationalisation of the terrorists’ grievances
The War on Terror is set to be the key determinant of US foreign policy (and hence global current affairs) for the rest of the decade
Global Terrorism Risk
What is the Global Terrorism Index aiming to do?
Clients feel that terrorism is a very real threat that will get worse before it gets better
Clients need accurate, up-to-date and independent analysis of the risks they face from terrorism in all the countries they operate
To meet these needs we used our country risk modelling skills to produce our Global Terrorism Index.
Global Terrorism Risk
What is the Global Terrorism Index aiming to do?
Our Index is designed to assess the risk of terrorism in each country, and against that country’s interests abroad, over the next 12 months
It does this by qualitatively rating five key factors for each country – Motivation, Presence, Scale, Efficacy and Prevention – and then giving each of these a quantitative weighting in order to determine its overall Terrorism Risk
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Terrorism Index Criteria - % Breakdown
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Global Terrorism Index 2004 - Africa Region
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What are the key findings?
The US has the 6th highest risk of terrorism. Another 11 September-styled terrorist attack is highly likely
The UK faces the greatest risk from terrorism of any Western European state, and is ranked 10th
overall Iraq is ranked top, followed by Colombia and
Russia
Global Terrorism Risk
What are the key findings?
Afghanistan, Pakistan, Saudi Arabia, Israel and Nepal make up the rest of the top ten
North Korea came bottom of the survey despite its membership in the so-called ‘Axis of Evil’
Tourism, energy, financial services and telecoms perceived to be most at risk of terrorism in our Client survey
US, UK companies perceived to be most at threat in Client survey – followed by Spanish, Australian and French companies
Global Terrorism Risk
Global Terrorism Index 2004 - Regional Averages
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Which regions/countries are most at risk?
Asia, the Middle East and Eastern Europe are the location for most attacks (97.8% of all 2003 attacks)
The following countries are most at risk of being targeted in a major terrorist attack:– Afghanistan, Algeria, Colombia, France, India, Indonesia, Iraq,
Israel, Italy, Kenya, Kyrgyzstan, Nepal, Pakistan, Peru, Philippines, Russia, Saudi Arabia, Spain, Sri Lanka, Tajikistan, Tanzania, Thailand, Uzbekistan UK, US, Yemen.
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Do you think terrorism poses a greater risk to than five years ago?
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Will the number of terrorist attacks continue to grow?
The overall number of attacks has actually decreased quite significantly from its high in the 1980s
This is mainly down to the demise of ultra-leftist groups in Western Europe, as well as to the resolution of the violence in Lebanon
In spite of the hyperbole surrounding terrorism in the media, there is no logical reason to assume that the overall number of terrorist attacks will resume the levels reached in the 1980s
Global Terrorism Risk
What is the risk of more major attacks designed to cause mass casualties?
Whilst the overall number of terrorist attacks is on the decline, the number of major attacks is on the increase
There have already been more major attacks this decade than in the whole of the 1990s
Indiscriminate attacks causing mass casualties are set to continue over the next few years: in 2002 more than 82% of those injured or killed in terrorist attacks were civilians
Furthermore, there is a very real risk of terrorists resorting to CBRN materials to carry out an attack
Global Terrorism Risk
Who will be the main perpetrators of these attacks?
Al-Qaida and other associated Islamic extremist groups will remain the main perpetrators of terrorist attacks
The main characteristics of such groups are:– hostility to Western cultural, military and business hegemony– willingness to cause mass civilian casualties– propensity to carry out simultaneous attacks in different cities/even
countries– ability to operate internationally – what links Morocco, the US, Saudi
Arabia, Spain, Indonesia and Turkey?
Global Terrorism Risk
To what extent will business be considered a legitimate target?
Business has long been considered a legitimate target by terrorists (for eg, the IRA targeting the City of London, Colombian guerrillas targeting oil pipelines etc)
The attack on the World Trade Center was effectively an attack against the most recognised symbol of US (or Western) capitalism
Almost 50% of international terrorist attacks in 2003 targeted business directly
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Which sectors are most at risk from terrorism?
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Do you factor the risk of terrorism into your decision-making process regarding investment locations?
Global Terrorism Risk
Global Terrorism Risk
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