Global Terrorism Risk World Markets Analysis Guy Dunn ([email protected]) World Markets Research...

Global Terrorism Risk

World Markets Analysis

Guy Dunn ([email protected])

World Markets Research Centre


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


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


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


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.


Scale of Terrorist Attacks Since 1945


Major Terrorist Attacks Since –1945 (>50 casualties)


Regional Split of Major Terrorist Attacks Since 1945


Perpetrators of Major Terrorist Attacks Since 1945


Total Terrorist Attacks Since 1981


Terrorist Attacks 2003 - Fatalities


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?


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



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.



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


Terrorism Index Criteria - % Breakdown


Global Terrorism Index 2004 - Africa Region


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


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 Index 2004 - Regional Averages


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.


Do you think terrorism poses a greater risk to than five years ago?


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


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


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?


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


Which sectors are most at risk from terrorism?


Do you factor the risk of terrorism into your decision-making process regarding investment locations?

Global Terrorism Risk World Markets Analysis Guy Dunn ([email protected]) World Markets Research...

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