Religious-pilgrimage system

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Lecture 3.2_Risk from Intentional Hazards HRV KFSC Fall 2020

I. Introduction a. Need to focus on the nature of losses due to hazards. b. Need to focus on profound difference between natural and human-

caused hazards. c. Our focus today is on intentional hazards like organized crime,

terrorism, and military conflict. d. But we will also need to address human-caused hazards that are

accidental, especially those that are not driven by humans seeking to improve their utility.

II. Primary vs. Secondary Losses from Hazards and Vulnerabilities a. The consequence or losses resulting from a particular hazard striking

an assets with particular vulnerabilities is complex.

b. It involves the immediate or primary damage. i. Human casualties (killed, injured, traumatized) ii. Property damage (damaged, contaminated, or displaced)

c. It also involves longer-term or secondary damage.

i. Individual 1. Stress to survivors: hunger, homelessness, despair… 2. Loss of personal property 3. Loss of wages or salaries

ii. Collective 1. Loss of business profits 2. Loss of tax revenues for local governments 3. Loss of confidence in local & national economy’s ability

to recover. 4. Loss of confidence in local security/political authorities 5. Loss of confidence in national security/political

authorities

d. Example I. Hurricane Katrina i. Hurricane Katrina had horrific immediate impact on the City of New Orleans in terms of lives lost, the stress and costs imposed on evacuated people, property damage, and large areas of contaminated soil.

ii. But it also inflicted serious political loss on the federal government under President George Bush, where many people questioned his basic administrative competence for not taking this enormous hurricane hazard very seriously and not

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working hard to prepare New Orleans for such a predictable disaster.

iii. As a result, this perceived incompetence was a major factor in his Republican Party losing the Presidential election a few years later in 1988.

e. Example II. Drought in Syria i. During the 2000s, there was a serious drought in Syria that caused many farmer to go bankrupt and move to cities to try to earn a living.

ii. So, the immediate effect was financial loss. iii. But since few could find decent jobs, the longer-term loss was

significant political frustration with the Syrian government of Assad.

iv. This frustration ultimately erupted into a major civil war during the Arab Spring of 2011.

III. Utility and Intentional Human-Caused Hazards a. NUG = TB(z) – TC(z)

TB = total benefits gained from inflicting hazard on asset TC = total cost to attacker endured from inflicting hazard on asset z = magnitude of attack on asset

b. Total Cost = Total Variable Cost – Total Fixed Cost

i. Total Variable Cost = TVC = TVC ii. Total Fixed Cost = Attack investment = P iii. But, TVC is a function of both hazard magnitude, z, and attack

investment, P. iv. As P increases, it seeks to push down or to the right the TVC(z)

curve, as shown in Fig. 2 v. Therefore, TVC = TVC(z, P)

z (hazard magnitude)

$

Total Benefit, TB(z)

Total Cost, TC(z)

Net Utility Gain (NUG)

z*

Fig. 1

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vi. So, TC(z, P) = TVC(z, P) + P

c. Example of attack investment, P.

i. P represents spending that enhances the capability of the attack organization and doesn’t get consumed in generating and utilizing the hazard against an asset.

ii. Examples of terrorist indirect cost or investment: 1. Training camps and training costs. 2. Assault rifles used in attack. 3. Bomb-making equipment 4. Safe houses

iii. Examples of terrorist variable costs

1. Money payments to families of suicide bombers 2. Training costs of suicide bombers 3. Injuries and deaths sustained in attacks 4. Prison sentences when captured alive 5. Ammunition used in generating hazards.

iv. the magnitude of the intentional hazard increases, the total

costs increase in an exponential manner, as shown in Fig. 1. v. The Net Utility Gain (NUG) is greatest when the magnitude is

z*, as shown in Fig. 1. vi. Therefore, it is reasonable to assume this is the magnitude of

the intentional hazard that should be planned for by the defenders of the asset.

z (hazard magnitude)

$

Fig. 2

TVC(z, P1) TVC(z, P2)

TVC(z, P3)

P1

P2

P3

TC(z, P1) TC(z, P2)

TC(z, P3)

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IV. Risk Analysis of Intentional Human-Caused Hazards

a. Probability of intentional hazard i. As we discussed in Module 1-Unit 2, the probability of an intentional hazard is directly proportional to the net-utility gain the attackers expect to gain from it.

ii. So, probability p(NUG) = k x NUG iii. Since NUG(z, P) = TB(z) – TC(z, P) – P iv. Then p(NUG) = k x [TB(z) – TC(z, P) – P]

b. Loss from intentional hazard = L(z)

i. The loss endured by the asset when subject to the intentional hazard of the attacker is directly related to the magnitude of the hazard.

ii. But it is also related to the vulnerability of the asset. iii. The greater the magnitude, the greater the loss. iv. But also, the greater the vulnerability, the greater the loss.

c. Why probability of vulnerability cannot be separated from probability

of intentional attack. i. With natural hazards, Risk = p(hazard) x p(vulnerability) x Loss.

ii. This is because these two probabilities are completely separate events, independent of each other, and thus their probability distributions are unaffected by each other.

iii. But with intentional hazards, the probability of the intentional hazard is profoundly affected by the probability of the vulnerability.

iv. Higher vulnerability causes the total attack cost curve to shift up, because the same effort put into the attack, as measured by the total variable cost, generates a higher magnitude of the intentional hazard.

v. As a result, the magnitude of the intentional hazard to maximize NUG changes, as shown in Fig. 3, where it increases in this case.

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d. Risk Equation for Intentional Hazards

i. Risk = p(NUG(z*) x L(z*) or

ii. Risk = p[TB(z*) – TVC(z*, P1) – P1] x L(z*) Where z* is the magnitude of the intentional hazard that maximizes the NUG of the attacker for a given attack investment, P1.

iii. This means the vulnerability of the asset is factored into the attacker’s total variable cost, TVC (z, P1) function. The lower the vulnerability, the more this function gets pushed down.

iv. If we assume that the probability of attack is directly proportional to the NUG of the attack, then Risk = k x NUG(z*) x L(z*)

z (hazard magnitude)

$

Fig. 3

TVC2(z, P1) TVC1(z, P1)

P1

TC2(z, P1) TC2(z, P1)

TVC1: attacking low-vulnerability asset TVC2: attacking high-vulnerability asset

NUG2 NUG1

z1 z2