Terrorism Risk Models: The Need for Common Measures

From the hot dog vendor located near a national monument to a multinational corporation with operations and significant assets around the world, we are all faced with decisions about addressing terrorism. Since the events of 9/11, enormous amounts of financial and intellectual capital have been invested to develop security responses to potential terrorism threats. Beyond specific, focused initiatives — most visibly increased airport security — a plethora of risk models have been (or are being) developed. Ostensibly, these models attempt to address the basic risk proposition: Risk = Frequency * Severity.