Transcript economic costs of terrorists attacks

ECONOMIC COSTS OF
TERRORISTS ATTACKS
New Era Associates, L.L.C.
“ It is very important to
concentrate on hitting the
U.S. economy through all
possible means.”
-
Osama Bin Laden
Economic Impact
$55 Billion = Drop in European Markets
following the Madrid bombings
$83 Billion = Cost of the 9/11 attacks on
the World Trade Center (Represents
direct & indirect costs)
$1 Trillion = Estimated Cost on the
Global supply chain should a WMD be
successfully detonated via a container
GLOBAL TRADE (GDP)
Country
2000
2025
United States
$9.82 Trillion
$18.3 Trillion
Brazil
United Kingdom
France
Germany
$762 Billion
$1.44 Trillion
$1.31 Trillion
$1.87 Trillion
$1.69 Trillion
$2.46 Trillion
$2.09 Trillion
$2.60 Trillion
Italy
Russia
India
$1.08 Trillion
$391 Billion
$469 Billion
$1.62 Trillion
$2.26 Trillion
$3.17 Trillion
China
Japan
$1.07 Trillion
$4.18 Trillion
$10.2 Trillion
$5.57 Trillion
MEDIAN INCREASE SPENDING
FOR SECURITY
Mean increase on security in 2002 was only 4%
Permanent increases in security in 2002 by
industry:
 71% - Energy & utilities
 62% - Financial Services
 47% - Technology
 46% - Healthcare
 42% - Retail/Wholesale Trade
 38% - Manufacturing
THE NEW PARADIGM:
INTERCONNECTEDNESS
A breech at any point along the system
compromises the entire system.
Security no longer a commercial risk,
but rather a systematic risk.
THE NEW PARADIGM:
INTERCONNECTEDNESS
For small and medium size firms,
security is either the cost of doing
business OR doing no business.
Security in post 9/11 era is an
investment, not a cost center
“The economic bleeding in continuing to
date, but it requires further strikes. The
key pillars of the U.S. economy should be
struck, GOD willing.The enemy can be
defeated by attacking his economic centers.”
- Osama Bin Laden
12/27/01
A shift in Targets
Hard Targets
Soft Targets
Multinational firms
Small & Medium sized
enterprises
United States & Western
Europe
Diplomatic Embassies
Asia and Middle East
Military Bases
Hotels, shopping centers,
leisure, and residential
facilities
Defense contractors
Five Suggested Attacks
A cargo container assault
mission aimed at a US choke
point at Seattle/Tacoma, Los
Angeles/Long Beach, or NY/NJ.
In addition disrupting trade,
such an attack would strike at
the heart of communication,
transportation and human
traffic flows.
Five Suggested Attacks
An incident directed at a
petroleum port facility with
Houston, Baton Rouge or
Philadelphia the most likely
targets. This would take
advantage of the fragility of the
system’s dependence on oil and
act as a symbolic message to
underscore the exploitation of
the Arab world by the West.
Five Suggested Attacks
Florida ports of Miami and Fort
Lauderdale are hit simultaneously.
Followed by a biochemical assault
on Disney World.
The use of bio chemicals has
biblical themes (pestilence, plague)
Force the state to declare Federal
bankruptcy (45-60 day period).
A “Personal” attack on Bush family.
Five Suggested Attacks
An attack on the Malacca
Straits in order to create a
crippling bottleneck to trade
between Asia and Europe.
Such a disruption would also
bring to a virtual halt MiddleEast oil exports to Asia.
Five Suggested Attacks
The disruption of the US-Sino trade pact
bringing the global economy to a halt.
As defenses around strategic locations in
the United States hardened, terrorists
redirect efforts at China were security
precautions are be more lax.
This would be retaliation for China’s
history of policies unfavorable toward
Islamic groups and Moslem populations.
Impact to Global Supply Chain
Off-shore outsourcing becomes a
security issue as factors such as
diverse standards, security
lapses, background checks and
partnerships/coordination with the
local infrastructure open the
system to vulnerability
Impact of Supply chain attack
Small-medium sized business impact
Time to bankruptcy?
Legal issues: “fiduciary responsibilities”
Ect.
Ect.
What to do?
Next Steps for your business
Threat assessment: “ Is it real?”
Risk analysis: “Where am I exposed?”
Implementation: Who,What,Where?
Documentation: Cover the legal bases
Government recommendations
“ We will continue to fight you
as long as we have weapons in
our hands.”
- Osama Bin Laden
10/18/03