Guiding Resource Allocations Based on Terrorism Risk

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Abstract
Establishing tolerable levels of risk is one of the most contentious and important risk management decisions. With every regulatory or funding decision for a risk management program, society decides whether or not risk is tolerable. The Urban Area Security Initiative (UASI) is a Department of Homeland Security (DHS) grant program designed to enhance security and overall preparedness to prevent, respond to, and recover from acts of terrorism by providing financial assistance for planning, equipment, training, and exercise needs of large urban areas. After briefly reviewing definitions of terrorism risk and rationales for risk‐based resource allocation, this article compares estimates of terrorism risk in urban areas that received UASI funding in 2004 to other federal risk management decisions. This comparison suggests that UASI allocations are generally consistent with other federal risk management decisions. However, terrorism risk in several cities that received funding is below levels that are often tolerated in other risk management contexts. There are several reasons why the conclusions about terrorism risk being de minimis in specific cities should be challenged. Some of these surround the means used to estimate terrorism risk for this study. Others involve the comparison that is made to other risk management decisions. However, many of the observations reported are valid even if reported terrorism risk estimates are several orders of magnitude too low. Discussion of resource allocation should be extended to address risk tolerance and include explicit comparisons, like those presented here, to other risk management decisions.

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