Terrorism: A Physical Threat to Economy

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Today we confront a new enemy—terrorism, a man-made risk that creates fear by intimidating the entire population with the threat of physical harm.

Terrorism is not new; it has ancient roots. Dean Alexander and Yonah Alexander, in their book “Terrorism and Business”, traced terrorism back as early as the first 70 years of the 1st century with recorded attacks by the Jewish religious extremists known as the Zealots Sicarri against the Romans in occupied Judea. This was followed by the martyrdom missions of the Muslim Hashasin (assassins) targeting the Christian crusaders during the 11th and 13th centuries. Even if the tools used to terrorize were rather primitive at that time, it proved the effectiveness of terrorism.

The periods between the 16th and 18th centuries saw the use by European maritime states of pirates or privateers in terrorizing the high seas to advance their policy objectives.

Keith Heanderson and Alec Moore, in the Handbook of Business and Security, point out that terrorism started with Wat Tyler and the peasants’ revolt of the 14th century, and the Reign of Terror (1793-1794) during the French Revolution. Various European groups with left- and right-leaning ideologies and militant nationalists achieved tactical successes. Terrorist  action, for example the assassination of the Austrian Archduke in Sarajevo in 1914, triggered the First World War.

Terrorism expanded worldwide, particularly in Asia and in the Middle East, where nationalist groups fought for their liberation from colonial rule. However, the phenomenal development of technology in the 60s, improvements in communication facilities, and rapid travel contributed to the waves of terrorism resulting in the intensification of ideological and political violence.

Contemporary terrorists utilize a wide range of tactics in order to achieve their strategic and tactical objectives. These include arson, bombing, kidnapping, hijacking, attacks on facilities and destruction of property, not to mention of assassination of key personalities. It is anticipated that terrorists’ capability will not be limited to arms, explosives and sophisticated weaponry but in the long-term use biological, chemical and nuclear weaponry. In the end, terrorists with adequate technological and financial assets increase their bargaining leverage by resorting to weapons of mass destruction.

There are several factors why the severity and frequency of terrorism is likely to increase in the  years to come.

  • Terrorism has proved successful in attracting publicity, disrupting governmental and business activities and in causing death and destruction of property.
  • Availability of arms, explosives, supplies, communications and financing.
  • International support network to local terrorists.
  • Religious extremism and loss of hope that provide terrorists a motive to escalate attacks and dramatically resort to weapons of mass destruction.

Terrorism causes apprehension and unthinkable anxiety. Anybody, anywhere and anytime can be a target so that many leaders of many nations after September 11 have mounted crucial action against the forces of terrorism and have pledged allegiance to combat this new menace.

The September 11 bombing of the World Trade Center and the Pentagon was an unprecedented event in contemporary history.  For some, it was a direct challenge to capitalism and democracy having the World Trade Center and Washington DC as the targets. But whatever the motive was, the assault was an act of barbarism.

The pressure of terrorism on the economy is devastating and catastrophic. It disturbs commercial activities and the delivery of essential services, such as power, transportation and telecommunications, that the basic support services in doing business collapse. Investors get frightened and wary from areas where the problem of peace and order, particularly terrorism, is present. Indeed, terrorism is a significant risk in the conduct of business operations. The threat of terrorism is more damaging than intense market competition.

The September 11 attacks  on the World Trade Center and the Pentagon in Washington DC have remarkably changed terrorism in the 21st century. Earlier, during the last decade of the 20th century, the United States witnessed a number of bombings worldwide, such as the World Trade Center in New York, Oklahoma City, and the US embassy in Kenya.

Terrorism is however not limited nor restricted to the United States. The United Kingdom, for instance, experienced for many years bombings by the Irish Republican Army (IRA) in pursuit of their political objectives. In other parts of the globe, terrorist acts are carried out with impunity reflecting different motives and methods. It ranges from simple extortion, kidnapping, and assassination up to the most feared of the terrorist’s weapon, hijacking and bombing.

The September 11 attack was a combination of both hijacking and bombing followed by bio-terrorism in some parts of the USA. The phenomenal growth of mass communications has wittingly or unwittingly provided terrorists an immediate worldwide audience for their actions.

Among the recent terrorist acts worldwide are the following:

  • New York’s World Trade Center bombing (February 1993)
  • Washington Shopping Street bombing (March 1993)
  • Bishops Gate in London truck-bombing (April 1993)
  • South Quay Station in the London Docklands bombing (February 1996)
  • Manchester City Centre bombing (June 1996)
  • World Trade Center attack (September 11, 2001)
  • Bali bombing, Indonesia, 202 dead (October 2002)
  • Davao International Airport bombing (March 4, 2003)
  • Marriott Hotel bombing in Jakarta: 10 dead, more than 100 injured (August 5, 2003)
  • HSBC & British Consulate bombing in Istanbul, Turkey: 27 dead, 450 wounded (November 20, 2003)
  • Madrid Train bombing: 190 dead and more than 1800 injured (March 11, 2004)
  • Communication (cell sites) and power transmission lines sabotage
  • Transportation (Super Ferry), LRT and buses in Cubao and Makati

What is terrorism?

There is no universal definition on terrorism. It can be seen in many different ways  by the victim, the perpetrator and others who are not involved in the act itself. However, it can be viewed and understood in terms of its actions and goals. Wilkinson, as quoted by the Center for the Study of Public Order at the University of Leicester, England: “Terrorism is a special form of political violence, not a political philosophy or a movement. It is premeditated and aims to create a climate of extreme fear. It is directed at a wider audience or target than the immediate victims of the violence. And it inherently involves attacks on random and symbolic targets, including civilians.”

The technologies made available to the terrorists today have changed their methods of attack. The development of high explosives more powerful than gunpowder, remote-controlled detonators and electronic timers could extend the time of planting explosives and its detonation and enable terrorists to manage and control the time and act of terrorism. The potential victim is now more susceptible to terrorism than in the past years in view of technological advances.

Regrettably, the September 11 attack has proven the immediate effect of terrorism on international commerce and the government sector.

Terrorist motives may vary from religious extremism to nationalism and ideology. But what is most alarming today is the sudden shift of the object of terrorist  attacks from government to business establishments. The change results from four basic reasons, namely:

  • Terrorists consider private businesses as soft targets
  • Terrorists increase political pressure by targeting private businesses
  • Terrorists challenge government’s ability to protect business in particular and society in general
  • Terrorist activities generate extensive media exposure
Department of National Defense Sec. Gilbert Teodoro, together with HE Sultan Hassanal Bolkiah and other government officials view a display of military equipment.

For instance, data centers, central monitor systems, transport, power and communication systems are all susceptible to sabotage resulting in extensive damage and disruption of essential services. These are key security points and are probable targets where a comparatively small device can inflict much damage and destruction.

Knowing organizational vulnerabilities to terrorism and recent events, however, does not diminish the threat of terrorism. It is imperative to accept the fact that terrorism can be damaging to business and lead to tragic results and financial losses.

The impact of terrorism on business can lead to losses in:

  • People (personnel, customers and contractors)
  • Assets (building and contents)
  • Information (electronic databases and other storage)
  • Processes (customer and financial transactions)
  • Systems (Information Technology)

Who are the terrorists?

Knowing and understanding the intentions and capabilities behind the  terrorist group—what, when and how they may attack—are essential elements of information needed to assess the risk to you, your personnel and your business.

Admittedly, business organizations face multiple risks ranging from simple crimes such as theft to intense market competition. A clear understanding and knowledge of how terrorism works is therefore imperative because terrorists can strike at any target anytime and any place of their choice.

How to respond effectively would mean knowing who the terrorists are and what are their motives and methods of attack. Even if their methods and motives are known, it is extremely difficult to determine their target and when they will strike. To do so requires a well-organized and large-scale method of eliciting vital information about the terrorists.

It is a common knowledge that the capability of private corporations and their security components has always been limited to crime and loss prevention. A package of thorough and essential security measures should be put in  place if we are to consider high-risk events such as terrorism. This necessitates a change in security strategy, structure, functions and organizational security culture from its outmoded and traditional tasks of crime and loss prevention as highlighted by E.P. Borodzic in his article, “Security and Risk: A Theoretical Approach to Managing Loss Prevention”,  published in the International Journal of Risk, Security and Crime Prevention (1996):

“The security industry is beginning to change in function and application. The narrow traditional task of security was crime and loss prevention but this defined role has broadened considerably to include health and safety, risk assessment and risk management components. The simplistic conception of security as control over physical access to organization and the controlled movement of property may have been adequate twenty years ago. Today it includes a much larger range of risks, such as fraud, terrorism and disaster contingency planning.”

Impact of terrorism on business

Nobody is immune from risks. Thus, it is essential for us to know how to handle them well. Businesses must accept terrorism as an enemy. Let us guard against terrorism with vigilance, firmness, sagacity and acumen to avoid business losses and failures.

Insurance programs worldwide have suffered from the spate of terrorist attacks and made insurance premiums too prohibitive. In fact, some insurance companies in the Philippines no longer provide insurance coverage for acts of terrorism, particularly in vulnerable areas. This has brought significant financial impact, such as higher insurance premiums and cost of mitigation.

Organizations of all sizes, private or public, therefore, face the challenge of improving the efficiency and effectiveness of their security.

The new anti-terrorist law, RA 9372, Human Security Act of 2007, strengthens the hand of government against terrorism. However, this will impose additional burdens on businesses, such as tracking of terrorists’ activities, including money laundering. An advantage, however, is that adequate risk management and contingency plans will be in place and the terrorist threat is likely to open opportunities for asset protection businesses, strengthening of information systems against cyber attacks, and enhancing protection of power, transportation and communication facilities.

In today’s threat landscape, the ability to ensure business continuity is essential not only as a key corporate responsibility but also in order to maintain peak performance and a competitive edge.

A new culture: A paradigm shift in managing security

Changing the corporate culture is a big task. However, communicating the right message to management and the entire organization at the right time is a critical factor in managing the shift in converging and integrating the disciplines of security, risk and disaster management.

I may be a little biased here, but security is normally associated with a uniformed guard patrolling the area or senior management naively thinking about the cost of security in relation to business operations and profitability.

Michael Chertoff, Secretary of Homeland Security, has stressed the need for the United States to have a “thoughtful and serious national discussion” about how to prioritize the nation’s resources and manage the irreducible risk of a terrorist attack.

He further stated that “we cannot protect every single person at every moment in every single place. We cannot look in every container and every box.”

Instead, Chertoff argued, the administration should adopt a “risk-management approach” to the danger of a terrorist attack, weighing “threat, vulnerability and consequence” to provide a guide to where government action and government dollars would do the most good.

Risk Management provides a logical and systematic method for dealing with uncertainty. It integrates the recognition of risks, risk assessment, developing strategies to manage it, and mitigation using managerial resources.

A risk-based security methodology will enable security professionals/leaders to bring the importance and value of security on the table for management discussion and eventual decision on how to provide adequate and acceptable protection to corporate assets.

In a global competition, lowering of production costs provide a competitive advantage. While security is viewed as an overhead-cost, efforts must be done to instill the belief that security is a business enabler and can add value to the corporation.

And finally, security must be viewed as a business process and designed to support corporate objectives. But it is of critical importance for security professionals/leaders to have a clear understanding and acceptance that corporations do need to develop countermeasures in order to protect corporate assets and ensure that business activities are carried out without disruption based on costs and well-defined benefits. •

 

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