Strategic surprise is a precious weapon in terrorist campaigns. Al Qaida managed to achieve this spectacularly on 9/11. Since then, counterterrorism efforts have been improved considerably, both within the American homeland and abroad. The result of this much-heightened state of alert: Out of dozens of significant jihadi terrorist plots against the Western Alliance, only a very few have not been interdicted.

Whether it is procuring or improvising weaponry, undertaking surveillance or testing an attack plan, specialist training and expertise within a terrorist team are needed for a plot to have a reasonable degree of success. Furthermore, the execution of a commando-style plot, such as hijacking or sabotage, would require a sizable group of assailants. But any major plot has a good chance of being stopped—the more ambitious the plot, the more guys who are involved, the greater is this chance. Too many terrorists spoil the plot.

Indeed, since 9/11, the only successful plots against the Western Alliance have involved improvised explosive devices and small arms. The development of technically sophisticated plots using innovative weapons, such as those of mass destruction, is optimally fostered within safe havens, which have been militarily denied to Al Qaida since 9/11.

Social Networks & Single-Actor Sociopaths

Every human being, including a terrorist, has a social network of contacts, both in the real world and online—which can lead to a communication intercept, a link to an informant or a tip-off. The aggregate social network of members of a terrorist cell provides an expanding target for intelligence penetration.

However, even in Western countries with the most effective and well-resourced counterterrorism services, catching lone-wolf terrorists is difficult and haphazard. With a minimal social network of plotters, the chance of interdiction may only be 1 in 4. Accordingly, in February 2010, then-CIA director Leon Panetta reckoned a lone-wolf event to be the principal terrorist threat facing the United States.

The amount of harm a lone wolf can cause depends on the ambient level of security. As a peaceful, tolerant society, the level of security had been kept purposely low in Norway. A tragic price was paid for this on July 22, 2011, when a terrorist attack was mounted by a right-wing Islamophobe, Anders Breivik.

The surprising scale of Breivik's attack took advantage of the terrorism-risk blindness of a country lacking any notable terrorism experience. In the more terror-prone and security-focused United States or the primary countries of Western Europe, if a group of conspirators were to acquire several tons of fertilizer and test a fertilizer bomb, their activity would likely come under the close scrutiny of the security services. In 2004, for example, five terrorists were caught in the U.K. stockpiling a ton of fertilizer and planning bombing raids in and around London.

LESSONS FOR TERRORISM UNDERWRITING

Accumulation risk control in any region of the world always has been a mainstay of terrorism underwriting. With the imposition of strict underwriting limits in specific regions, the amount of terrorism cover to write should be risk informed.

In particular, it is important for underwriters to appreciate their implicit reliance on counterterrorism capability to control terrorist activity: Terrorism underwriters are essentially covering the financial risk of any failure of government security services. In a country such as Pakistan, where the intelligence service is utterly compromised, attacks can occur on a daily basis. But in the Western Alliance, attacks occur as just the occasional failures of the defensive process of attack interdiction.

In these Western countries, the allocation of government resources toward protecting their citizens against terrorism is substantial. This expenditure is warranted because Western citizens are especially averse to being victimized by wanton acts of terrorism. There is minimal public tolerance for the failure to interdict terrorist attacks. This heightened risk aversion is a human behavioral trait that drives loss mitigation, counter-balancing the psychopathic behavior of terrorists seeking to maximize loss. The likelihood of any individual falling victim to a terrorist attack is very low, and Western governments are mandated by their electorates to ensure it stays this way.

When President Bush appointed Tom Ridge as the first head of the Department of Homeland Security, he told him not to let 9/11 happen again. He didn't, and no major attack has happened since. The commercial prospects for terrorism underwriting in the coming decade depend crucially on the resolution, skill and expertise of security leadership being vigilantly maintained.

Special Reports /

Lone-Wolf Attacks Pose Biggest Terror Threat For Western Societies, Underwriters

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