Global Terrorism Risk

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Global Terrorism Risk

• World Markets Analysis

Guy Dunn (guy.dunn_at_wmrc.com) World Markets
Research Centre
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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

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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

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WMRCs 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

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WMRCs 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.

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Scale of Terrorist Attacks Since 1945
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Major Terrorist Attacks Since 1945 (gt50
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?

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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

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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.

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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
  countrys 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

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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

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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

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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

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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?

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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?
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Global Terrorism Risk