Minimizing Terrorism’s Impact

International terrorism is the systematic use or threat of violence across borders to attain a political goal while conveying a political message. One of the most recent high-profile examples is the 2008 attack in Mumbai, India, by 10 Islamic militants who killed nearly 200 people in more than a dozen locations, including two luxury hotels and a Jewish center. Bombings are most common, followed by armed assaults, kidnapping, vandalism and hijacking. Global mass media has ensured the visibility of these types of attacks, spreading fear, creating unfounded expectations of other attacks, and harming economies. Unfortunately, according to the U.S. Department of State, businesses are most often the target of terrorists.

Terrorists often succeed in disrupting economic systems by affecting supply and demand. Companies suffer, enduring reduced revenues or increased costs, and as Americans saw in the attack of the World Trade Center in New York City, a long rebuilding period. Companies doing business in other nations need to be prepared for the range of potential terrorist risks or for the impact on their businesses of attacks taking place elsewhere. In fact, the greatest risk isn’t a direct attack, but the indirect effect of an attack elsewhere on a company’s supply chain, transportation systems, or other factors. Today’s global climate requires that companies be prepared for more than survival – the goal is continuity.

Preparing for exposure to terrorism by minimizing risk and maximizing flexibility of response is particularly important for companies doing business in countries or regions where attacks are more frequent, but should happen for all locations. Risk management involves conducting a risk assessment that compares the severity of possible outcomes with the probability of an attack to help determine the likelihood of direct damage to the operation. It includes creating a disaster plan that might be similar to what is used for a natural disaster that disrupts power, causes structural damage to a facility, or even injures workers.

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About Michael Czinkota

Professor of International Marketing, Business and Trade at Georgetown University, Washington, DC, U.S. and University of Kent, Canterbury, UK - http://www.faculty.msb.edu/index.htm http://www.twitter.com/#!/michaelczinkota http://www.facebook.com/169628456631

5 thoughts on “Minimizing Terrorism’s Impact

  1. Of course there is a linkage between the economic conditions before and after. We know that there were problems with the economy before – but certainly they were exacerbated by the WTC attacks.
    You are right, there are both direct and indirect effects of terrorism. Typically, most firms are affected by the indirect effects, which tend to be financially much larger than the immediate direct effects.

  2. International business opens up an incredible amount of opportunity for a company, however it also opens them up to the threat terrorist attacks. By providing a functional target, does international business indirectly augment the potential effects of terrorism?

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