Religious-pilgrimage system

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RISK FROM INTENTIONAL HAZARDS HRVA, FALL 2020

Administrative Issues

Homework 2.3 (Week 5)

•  Sources: How can I tell whether you are using your sources if you don’t reference them in your writing?

•  Q3 Network analysis: How can you declare that the water system is scale-free if you don’t actually analyze the network?

•  Q1 Answer: Why did so many not answer the first question: scale free or random?

Quiz 3.2 (Week 7): End of Class 3 this week

Midterm Exam (Week 8) Based on homework assignments Modules 1, 2, and 3

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Saudi Fresh Water Network

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Network Diagrams

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Intentional Hazards (Review Week 2) •  Hazards caused by humans. •  Why? Because they hope to gain, increase their utility, from the destruction they

cause.

•  Examples? •  Terrorists: seek to gain politically by killing people in dramatic attention-grabbing

manner.

•  Corrupt security officials: seek to gain money from bribes or laziness by neglecting

their duties thus allowing harm to occur.

•  Insurgents: seek to overthrow a government through military destruction of armies and

civilian populations.

•  Organized Criminals: seek to gain money by inflicting harm or losses on other people.

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Analyzing intentional hazards like a business •  Drug Lords, Terrorists, Insurgents: variable-production costs required to inflict

losses that they can reduce through ”attack” producing investments.

•  Terrorists, Insurgents: Attack production investments: rifles, military training of

recruits, surveillance of targets Examples? Ammunition, injuries, bomb-making chemicals, salaries of gunmen, arrest risk.

•  Thieves or drug dealers make “advertising” investments to get a high price for the goods they sell.

Examples? free samples of illegal drugs, terrorizing rival drug gang, bribing police officers.

•  Terrorists and insurgents develop ideologies or propaganda to get more money and recruits from supporters, or “advertising” investments.

Examples? Religious duty to protect Islam, civic duty to fight political corruption, national

duty to fight foreign military occupation or colonization. DD/MM/YYYY DOCUMENT TITLE 6

Profit Equation for Intentional Hazards or Attack

Profit or Net-Utility Gain= Total Benefit of Attack – Total Cost of Attack Total Costs = Total Variable Attack-Production Cost + Attack-Production Investment +

Ideology-Advertising Investment

Let

Total Benefit = TB ($)

Total Variable Attack Production Cost = TVC ($)

Attack Production Investment = P($)

Ideology Advertising Investment = A($)

So, Profit, π = TB – TVC – P - A DD/MM/YYYY DOCUMENT TITLE 7

Intentional Hazard Strategies So, the same strategies that apply to business manufacturing firms, also apply to

terrorists, insurgents and organized criminals.

Let z = the magnitude or frequency of the intentional hazard attack

Then Profit or NUG = TB(z, A) – TVC(z, P) – A – P

If Net Benefit =NB(z, A) = TB(z, A) – A If Total Cost = TC(z, P) = TVC(z, P) + P

Then Profit or NUG = Net Benefit(z, A) – Total Cost(z, P) = NB(z, A) – TC(z, P) Key strategic question: how big should the performance, z, investments in A and P be

to maximize difference between NB(z, P) and TC(z, P)? DD/MM/YYYY DOCUMENT TITLE 8

Example

Assume you are a terrorist leader and you are trying to determine whether or not to

attack a particular asset.

If the TVC = $50,000 and P = $20,000 and TB = $100,000 and A = $10,000

What is the profit or net utility gain?

TC = TVC + P = $50,000 + $20,000 = $70,000

NB = TB – A = $100,000 - $10,000 = $90,000 So, NUG = $90,000 - $70,000 = $20,000

Should you launch the attack? If you increase P and A, will you increase or decrease

NUG?

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Intentional Hazards and Vulnerability of Asset

Big difference between intentional and natural hazards:

1.  Natural hazards don’t care about vulnerability of targeted assets. 2.  Intentional hazards care very much about vulnerability of assets they seek to

destroy.

Why?

•  Because highly vulnerable assets require far lower total variable cost to destroy. And the lower the cost, the higher the profit.

•  Since intentional hazards seek to maximize their profits, they seek out the most

vulnerable assets to attack in order to minimize their total cost and maximize profit.

•  Note: they only attack vulnerable assets when attack benefits are sufficiently high.

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Intentional Hazard Risk

Consequence? Attack probability is not independent of asset vulnerability

So, the natural hazard risk equation of R = T x V x L is not valid.

Why?

Risk = probability of loss x magnitude of loss

Probability of intentional loss = p(NUG): the higher the attack NUG, the higher the

probability the attack will occur.

Magnitude of loss = L(z): the higher the magnitude of attack, the higher the loss to

the asset.

Intentional Hazard Risk, R = p(NUG) x L(z)

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Key Observation

Question: What is the level of attack magnitude that will generate the highest

probability of attack?

Answer: the level of magnitude that will maximize profits for the attacker.

So Risk = p[NUG(z*)] x L(z*) where maximum profit = Profit (z*)

But maximum profit is also determined by the optimum levels of ideology advertising,

A* and attack-production investment, P*.

So Risk = p(z*, A*, P*) x L(z*)

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Key Conclusion

To determine risk of an intentional hazard, you need to know the best investment

levels and best attack magnitude level to maximize the attackers profit.

So, how do we determine maximize profit?

Graphical analysis using the TVC(z) and TB(z) functions for different levels of

investments.

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z (hazard magnitude)

$

Net Benefit, NB(z, A1) = TB(z, A1) – A1

Total Cost, TC(z, P1) = TVC(z, P1) + P1

Net Utility Gain (NUG) =NB(z, A1) – TC(z, P1)

z*

Fig. 1

P1

A1

Total Variable Cost, TVC(z, P1)

Total Benefit, TB(z, A1)

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)

Minimum Total Cost

NB(z, A1)

A1

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 A1

NB(z, A1)

Note: Decreasing vulnerability decreases risk to asset. Why? R = p(NUG) x L(z) NUG1 is lower so probability of attack is lower; z is lower so magnitude of loss is lower