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19 - Terrorism, Insurance, and Preparedness: Connecting the Dots

Published online by Cambridge University Press:  30 July 2009

James W. MacDonald
Affiliation:
Independent Commercial Insurance and Reinsurance Consultant Philadelphia
Philip E. Auerswald
Affiliation:
George Mason University, Virginia
Lewis M. Branscomb
Affiliation:
Harvard University, Massachusetts
Todd M. La Porte
Affiliation:
George Mason University, Virginia
Erwann O. Michel-Kerjan
Affiliation:
University of Pennsylvania
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Summary

“We cannot enter data about the future into the computer because such data are inaccessible to us. So we pour in data from the past to fuel the decisionmaking mechanisms created by our models, be they linear or non-linear. But therein lies the logician's trap: past data from real life constitute a sequence of events rather than a set of independent observations, which is what the laws of probability demand…. Even though many variables fall into distributions that approximate a bell curve, the picture is never perfect … resemblance to truth is not the same as truth. It is in those outliers and observations that the wildness lies.”

– Peter Bernstein, Against the Gods, 1996

The shocking terrorist assault on September 11, 2001, was one of those “outliers” where, as Peter Bernstein might say, “the wildness lies.” In the immediate aftermath, the coordinated attacks on the Pentagon, on the World Trade Center, and in the air over Pennsylvania appeared to defy all logical explanation and rational analysis. The previous comparable attack by foreigners on continental United States soil occurred almost two centuries ago, when British soldiers burned District of Columbia government buildings during the War of 1812. Prior to the 1990s, the most serious act of domestic terrorism had arguably occurred more than a century earlier with John Brown's 1859 attack on a federal arsenal at Harper's Ferry.

Throughout the 1990s, America witnessed a growing frequency of large and small domestic and foreign terrorist incidents.

Type
Chapter
Information
Seeds of Disaster, Roots of Response
How Private Action Can Reduce Public Vulnerability
, pp. 305 - 337
Publisher: Cambridge University Press
Print publication year: 2006

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