Evaluating Terrorism Using Risk Analysis

Fires burn in the rubble of the World Trade Center.

Insurance companies, which are in the business of not evaluating risk wrong over time and across categories, pay good money to people who work for them as actuaries. These actuaries are trained in the evaluation of different sorts of risk, and work to make sure that the insurance companies are more than covered should any of their policies be called on to cover a large loss on the part of an insured. They evaluate small but relatively likely risks as well as enormous but rare dangers.

Evaluating risk in national security is hard, but not as hard as the national security establishment would have you believe. For decades, the smartest American security thinkers have worried that in order to do their jobs, they need to have a reasonably good grasp on the future. As I wrote in the National Interest in 2007,

The father of American strategic analysis, Sherman Kent, grappled with these difficulties in his days at OSS and CIA. When Kent finally grew tired of the vapid language used for making predictions, such as “good chance of,” “real likelihood that” and the like, he ordered his analysts to start putting odds on their assessments. When a colleague complained that Kent was “turning us into the biggest bookie shop in town”, Kent replied that he’d “rather be a bookie than a [expletive] poet.”

If there was a bookie who built himself a casino evaluating the threat from terrorism correctly, it’s John Mueller. Mueller had the temerity to publish in the summer of 2002 an essay titled “Harbinger or Aberration?: A 9/11 Provocation.” As we were being instructed on how to duct tape ourselves into our homes and the people responsible for our security were figuring out how to set a trillion dollars and almost 5,000 Americans on fire, Mueller shrugged his shoulders, arguing that

rather than foreshadowing the future, the [September 11] attacks may turn out to have been a statistical outlier, a kind of tragic blip in the experience of American national security.

To term this a “provocation” was to understate things. Or rather, it would have been a provocation had more people in Official Washington read it. Most of them were too busy picking up the rap video’s worth of money raining down on their heads from the subsequent “gusher” of spending inaugurated on September 12.

If John Mueller had been running a hedge fund evaluating terrorism in 2002, he’d be our era’s J. Paul Getty, and the entire national security commentariat would’ve made Bernie Madoff look like BlackRock. But John Mueller wasn’t trying to make money, and the national security establishment enjoys far less meaningful oversight than the financial industry.

Rather, if Mary Douglas and Aaron Wildavsky are to be believed, societies do not evaluate risk on the same basis that insurance companies or hedge funds do; such a view ignores the central role of culture and identity in selecting which dangers to emphasize and which to downplay. How much relative weight does the citizen picked at random place on the risks posed by:

Violent crime in inner cities;
The risk of climate change;
Terrorism;
Guns?

When put this way it is impossible to imagine a citizen who judges these dangers based on the same factors that the insurance company actuary would use.

For his part, John Mueller has taken up with a specialist in risk analysis and published a book and a series of recent articles amplifying his earlier claims. For its part, the national security establishment has continued its profligacy and recklessness, all on the back of claims that could not withstand, and likely were not built to withstand, even perfunctory risk analysis.

Say what you will about hedge funds: they wouldn’t try to get away with this.

What Are the Risks of Terrorism? (with John Mueller and Mark G. Stewart)

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Justin Logan

Justin Logan is a contributing editor for RichardCYoung.com. Formerly the Cato Institute's director of foreign policy studies, Logan writes primarily about politics and American foreign policy. He holds a master’s degree in international relations from the University of Chicago and a bachelor’s degree in international relations from American University. He is an expert on U.S. grand strategy, international relations theory, and American foreign policy. He has lectured on American strategy across the country and across the world, and his articles have appeared in International Security, the Journal of Strategic Studies, Foreign Policy, the National Interest, the Harvard International Review, Orbis, National Review, the American Conservative, Reason, Politico, and the American Prospect, among others. A native Missourian, Logan currently lives in Washington, DC with his wife and two sons, where they are opening a Latin American wine and spirits bar, Ruta del Vino.