Economic impact of terrorism soars to $83 billion per year
The impact of terrorism on society and economy has soared in the past decade. According to a report by professional services firm Marsh, alongside more victims, terrorism now comes with an economic cost of $83 billion per year, four times the value in the years before the financial crisis.
Terrorist activity has systematically grown since the turn of the century, driven by a range of extremist ideologies, including Islamist extremism and extreme right-wing terrorism. Aside from injuries and loss of life, terrorism results in a range of secondary negative economic outcomes for businesses and countries.
In the years before and after the September 11 attacks in the United States, the economic cost of terrorism hovered well below the $20 billion barrier. By 2014, the global economic cost rose to nearly $100 billion, mainly due to a rapidly deteriorating situation in Iraq and Syria, and the emergence of ISIS.
Despite these developments, in more recent years the number of terrorist attacks globally has subsided. Last year, 15,819 attacks resulted in 13,570 fatalities, down from 21,274 attacks and 45,081 fatalities in 2014. The predominant threat globally is from Islamist extremists focused on inflicting mass casualties in low-capability attacks on crowded public spaces.
Between 2014 and 2018, more than half of global terrorist attacks on public areas occurred in the Middle East and North Africa (MENA). Terrorist attackers are mostly affiliated with a number of groups, including Islamic State, Hay’at Tehrir al-Sham, Hezbollah, Al-Qaida and Ansar al-Sharia Libya.
In Europe, most attacks were conducted by radicalised individuals returning from fighting in Iraq and Syria. Extremists have been most active in France, Spain, and the UK, with vehicles, firearms, and knives the most prevalent weapons.
However, one finding the researchers have uncovered is that the terrorist landscape is diversifying, illustrated by the recent terrorist incidents in Egypt, New Zealand and Sri Lanka. Africa too is seeing terrorism impact the daily lives of its people. Mozambique for instance faces an emergent terrorism risk in its northern Cabo Delgado province, while Chad faces increased activity by insurgents in the north as well as Libya-based militants.
According to the authors, governments should strengthen their anti-terrorist policies, while organisations should implement adequate risk and crisis management strategies to protect their people and balance sheets from the persistent threat of terrorism. They should also consider terrorism insurance in order to cover the economic costs when such an event happens. As it stands, the US is the world’s largest buyer of terrorism insurance, with around 60% of large organisations purchasing such coverage.
