Analysis and Synthesis of Loss Estimation

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  LERA Project     QUANTITATIVE ASSESSMENT OF
TERRORIST RISKS  
Dmitry REZNIKOV Senior research fellow
Institute for Machine Sciences, RAS    
Technical workshop May 31 June 2, 2006
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• BASIS PRINCIPLES IN ADDRESSING TERRORIST RISKS
• 1. Emergencies triggered by terrorist attacks
  develop according to laws analogous to the
  development of ordinary emergencies caused by
  manmade or natural disasters ?
• (1) They may be analyzed through methods
  and models applied for addressing classical
  problems in the risk theory.
• (2) Terrorist threat should be included in
  the set of threat scenarios of natural/manmade
  catastrophes.
• (3) Focus on the initiation stage of the
  emergency triggered by a terrorist attack
• 3. Intentional attacks are aimed at the most
  vulnerable and critical element ? Structure of
  losses is substantially modified (substantial
  secondary and cascade losses).
• 4. Terrorists can choose the moment and place of
  an attack (to exploit systems
  weaknesses) ? Game theory must become an
  important part of PRA
• 5. Terrorist can adapt to changes ? Dynamic
  approach is needed

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Federal State Program Safety of Population and
Industrial Facilities Taking into Account Risks
of Natural and Manmade Catastrophes (1992-2000)
Federal Special-Purpose Program Reduction of
Risks and Mitigation of Consequences of Natural
and Manmade Emergencies in the Russian
Federation (2000-2005)
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INCREASE OF THE NUMBER OF TERRORIST ATTACKS IN
RUSSIA    
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TYPES OF MODERN TERRORISM Traditional terrorism
implies physical elimination (murder, abduction)
of political figures of state and social
structures as well as ordinary people in order to
achieve certain social, economic, and political
goals   Technological terrorism is represented by
actions aimed against infrastructure targets
critical to national security or committed by
means of especially dangerous technologies,
devices, and materials.   Intellectual terrorism
is a type of terrorism in which the initial
impact factors might be specially inserted into
regulatory or technical documents, or introduced
into and design engineering elements when new
technological facilities are created or into
operation of the existing ones.
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• CHALLENGES IN ADDRESSING TERRORIST RISKS
•       High level of uncertainties related to
  human behavior and intentions
•       Lack of relevant statistics
•       Information is classified
•       Dynamic nature of terrorist threat
  (terrorists can adapt to current conditions and
  learn from previous experience)
• METHODS FOR ADDRESSING TERRORIST RISKS
•       Probabalistic approaches (incl. Bayesian
  updating procedures)
•       Possibilistic models
•       Fuzzy sets
•       Game theory (for addressing conflicts
  between intelligent and rational decision-makers
  measures and countermeasures)
•  

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• ADVANTAGES OF THE MODEL
•  Ø  provides an approach for comparing and
  aggregating terrorist risks.
•            formalized procedure for risk
  assessment
•            basis for rational resource
  allocation.
•  Ø     provides a approaches to managing
  terrorist risk through
•            reducing threats
•            reducing vulnerabilities
  towards terrorist threats
•            reducing losses from
  terrorist impacts (organizing defense
  barriers, rational resources allocation )
•  
• provides a basis for more sophisticated models

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• DRAWBACKS OF THE MODEL
•      It considers threat of attack of single
  type
•      It does not address the issue of intensity
  of terrorist attacks
•      Simplified representation of vulnerability
  (either successful attack with damage or no
  success with no damage).
•      Uncertain parameters (consequences in
  particular) are presented not by probability
  distributions but by point estimates (expected
  values)
• Static picture of terrorist risk (does not allow
  to address dynamic properties of terrorist
  threats and vulnerabilities)

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The architecture of the TRA module
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NUMERICAL EXAMPLECash-flow diagram (all values
in millions of rubles)
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CHALLENGES 1.Dynamic analysis of terrorist risks

• There is a need to update the model for each time
  period
•       changes of the structure of the system
•       changes in the spectrum and intensities of
  terrorist threats
•       new statistics and intelligence that
  should be incorporated into the model
•  
• This could be done through Bayesian updating
  procedures.
•  
• 2. To expand time window of the assessment
• Need to
•       move beyond traditional static
  vulnerability assessments towards dynamic
  vulnerability assessment
•       consider long-term losses,
  tangible/intangible, reversible/irreversible
  losses
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• This could be done through development of dynamic
  vulnerability assessment models