CREATE

CREATE's Southers Addresses Boston Bombings at Congressional Hearing

Fri, 17 May 2013 14:06:13 -0800

By Matthew Kredell

Erroll Southers, an adjunct professor at the USC Price School of Public Policy and associate director of the USC Center for Risk and Economic Analysis of Terrorism Events (CREATE), provided testimony on May 9 at a House Committee on Homeland Security hearing titled "The Boston Bombings: A First Look."

"To be invited to speak in front of Congress, professionally speaking, is a tremendous honor," said Southers, who was serving as a Congressional witness for the second time. "To be a subject-matter expert invited back on a topic so critical going forward is an opportunity to represent our university, show people what we're doing at USC CREATE and hopefully contribute to some improvements."

Southers told the committee that terrorism requires a combination of three factors -- an alienated individual, a legitimizing ideology (engaged through radicalization) and an enabling environment. Of the three, the environment is the biggest opportunity for positive influences, policies and behaviors that may reduce the risk of homegrown violent extremism, such as the kind seen in Boston.

He recommended that national efforts address the role communities play in facilitating and, more importantly, hindering radicalization. Community inaction, either through tacit approval of extremist ideas or a hesitancy to speak up when encountering an individual exploring a legitimizing ideology, provides an enabling environment.

Southers warned that many of these communities are now online and that the people participating in these virtual communities can take part in preventing or facilitating violent extremism in the same way as real-world communities.

"We live in a world and culture where we believe, with enough resources devoted, we can eliminate a threat," Southers said. "What we have to get used to is that on a good day, we are containing a threat or hopefully reducing the risk, but we will never eliminate a threat."

Southers was one of four expert witnesses called for the hearing. He provided five minutes of oral testimony, a more detailed six-page written submission and answered questions. He was asked to participate by Rep. Bennie Thompson (D-Miss.), the committee's ranking member.

Studying the possibility of attacks at sporting events and mass gatherings already was an area of focus at USC CREATE prior to the Boston bombings.

"The work we are doing is to use game theory for true randomization in becoming unpredictable to our adversary," Southers said. "We appear to be everywhere by scanning people and places when they don't expect it. Our research efforts will continue to address what a month ago was just a threat and now, unfortunately, has become a successful attack in this country."

View photos on Flickr.

World Risk Day Virtual Summit Today

Tue, 14 May 2013 11:53:07 -0800

As the centerpiece of World Risk Day, the Virtual Summit on May 14, 2013 brings together the world's leading experts on risk and project management from some of the world's largest and most complex mega-projects, to share their insights through webinars and Q&A sessions. Attend and earn Category B PDUs.

Registrants will also be sent links to view their selected webinars after World Risk Day - so register for all the sessions that interest you, even if you cannot attend a particular time slot on the day.

World Risk Day 2013 webinars include:
•Using Risk Modeling, Analysis, and Assessment to Inform Homeland Security Policy and Strategy - Assistant Secretary Alan D. Cohn, US Department of Homeland Security
•High Risk Projects - A Global Perspective - Drew Slaton, Project Manager, Bechtel
•Major Project Risk Management: Aligning Contractor, Owner, and Oversight Agencies - Daniel D'Angelo, Deputy Chief Engineer, New York State Department of Transportation
•New concepts in understanding and managing risk in projects - David Hillson, The Risk Doctor
•Developing an holistic approach to risk management - Christoph Schwager, Chief Risk Officer, EADS
•Strategies for successful collaborative risk management with contractors and the supply chain - Rob Halstead, Head of Risk Management, Crossrail
•Shattering the project myth - managing cost and schedule alone doesn't = project success - Chris Bell, Chief Marketing Officer, Active Risk
•What lessons can be learned from the world's Top 100 infrastructure projects - how can knowledge be shared? - Norman Anderson, President & CEO, CG/LA Infrastructure
•What makes a great risk manager and how innovation projects influence risk management success - Michael Lopez, Senior Associate, Strategic Innovation Group, Booz Allen Hamilton
•ISO 31000: A Risk Management Standard for Decision Makers - Alex Dali, President, Global Institute for Risk Management Standards

MORE INFO HERE

CREATE Economists Featured in Wall Street Journal

Sat, 27 Apr 2013 15:32:26 -0800

BILL FOR A BOMBING CAN BE HARD TO TALLY
By Carl Baliak
View Original Article

As investigators try to uncover the motives and methods of the alleged Boston Marathon bombers, another mystery may take longer to solve: How much will the attacks harm the economies of Boston and the U.S.?

Economists still haven't reached a consensus on the cost of the far-deadlier Sept. 11, 2001, terror attacks. Questions such as whether to count the cost of the war in Afghanistan, the plunge in the stock market after the attacks and the post-9/11 fall in airline travel, have led to a broad range of estimates, from less than $100 billion to more than $2 trillion.

Few economists expect the Boston attacks to cost anywhere near those amounts. Property damage, deaths and injuries were much more limited in Boston than after Sept. 11 in New York, in Stonycreek Township, Pa., and at the Pentagon. Boston was shut down for a large part of a day, but economic activity in a broader area ground to a halt in the days and weeks after the 2001 attacks.

Much of the Boston economy carried on even as people were confined to their homes last Friday, in part because many jobs could be done by telecommuting. And unless stronger links are found between the alleged bombers and overseas terror groups, the marathon bombing is unlikely to provoke overseas military activity or fears of more attacks from the same source.

Yet uncertainties remain. Economists say cities tend to bounce back well from one attack, but a follow-on assault could be devastating to consumer and business confidence. The Boston bombers' effectiveness in shutting down the city, despite their apparently limited training and resources, could inspire copycats.

"In the short run, much of the lost revenue from the shutdown will be recouped in 'relief' celebrating and shopping following success in apprehending" suspect Dzhokhar Tsarnaev, said Michael J. Carter, an economist at the University of Massachusetts, Lowell. But, he added, "This confidence is fragile."

Economists studying terrorism's impact generally try to separate the direct costs of attacks from the costs of responses. Responses, such as military action in Afghanistan against the Taliban or Boston's all-out manhunt for the bombing suspects, are harder to attribute to the initial attacks because they aren't inevitable.

Paying the costs of responses also can bring benefits of its own--for example, by preventing more attacks. "Suppose we did not pay them and allowed the terrorism threat to be higher--what would the economy look like?" said V. Kerry Smith, an economist at Arizona State University.

Yet there is still controversy about whether to pin the cost of the war in Afghanistan on the Sept. 11 attacks. "The Afghanistan intervention was a direct response to the 9/11 attacks, so all the costs are directly attributable," said Linda Bilmes, senior lecturer in public policy at Harvard University. She and Joseph E. Stiglitz, Nobel Prize-winning economist at Columbia University, have estimated the Afghanistan war has cost the U.S. $2 trillion.

Other economists are skeptical. Brock Blomberg, at Claremont McKenna College, said it is best to exclude war costs in assessing Sept. 11. "Otherwise it turns into a bit of a political exercise," he said.

Adam Rose, an economist at the University of Southern California, prefers to include only direct costs such as business interruption and property damage. Even there, estimates vary widely. Prof. Rose and colleagues enlisted eight teams in 2009--with funding from the Department of Homeland Security--to each model the economic impact of Sept. 11, and got estimates ranging from $0--if the pre-existing U.S. recession was entirely to blame for economic woes--to $549 billion. Separating the effects of that recession from those of the attacks is one of the main challenges facing researchers.

Disquietingly, the loss of lives isn't the predominant factor, economically speaking. Even using a value of about $7 million to $8 million per life, a typical estimate used by government agencies for cost-benefit analyses of saving lives, the Sept. 11 attacks cost only about $20 billion to $25 billion in human capital. "It's much smaller than business interruptions," Prof. Rose said.

Confining the scope to direct costs may miss broader economic effects. A 2004 paper by Prof. Blomberg and colleagues used a database of 12,164 world-wide terrorism incidents between 1968 and 2001 to compute the macroeconomic effect of such acts, and found that on average they are linked to a decline in a country's economic growth of half a percentage point. However, their effect on growth in the more-developed countries of the Organisation for Economic Co-operation and Development was statistically insignificant.

"In terms of terrorism, most advanced economies are reasonably resilient," Prof. Blomberg said. "Other forms of conflict such as civil war or external war are much more damaging."

>--Learn more about this topic at WSJ.com/NumbersGuy. Email numbersguy@wsj.com.
A version of this article appeared April 27, 2013, on page A5 in the U.S. edition of The Wall Street Journal, with the headline: Bill for a Bombing Can Be Hard to Tally.

LISTEN to CREATE 's Adam Rose Discuss the CBP Economic Study on KPCC Radio

Thu, 18 Apr 2013 14:11:43 -0800

Adam Rose was interviewed by KPCC about a study CREATE recently completed. The study estimates the impacts of wait times at major ports of entry on the U.S. economy due to changes in customs and border officers staffing. Dr.Rose is the principal investigator of the project.

CLICK HERE TO LISTEN TO THE STUDY'S CONCLUSIONS

ARMOR-PROTECT Project Wins Wagner Prize

Wed, 10 Apr 2013 15:00:52 -0800

A team of 10 researchers from the Coast Guard Research and Development Center, University of Southern California, and University of Chile were recognized April 8, 2013, as the recipients of the 2012 Daniel H. Wagner Prize for Excellence in Operations Research Practice at the annual Institute for Operations Research and the Management Science (INFORMS) Analytics Conference in San Antonio. The Coast Guard Research and Development Center and its partners' prize-winning project was titled "A Deployed Quantal Response-Based Patrol Planning System for the U.S. Coast Guard." The Wagner prize emphasizes the quality and coherence of analysis used in practical problems.

SAN ANTONIO- Lt. Kathryn Moretti, center, accepts the Daniel H. Wagner Prize for Excellence in Operations Research Practice along with team members Milind Tambe, left,University of Southern California and Fernando Ordóñez, University of Chile, April 8, 2013. Photo courtesy of INFORMS.

In their paper, the team described the model, theory and deployment of the Port Resilience for Operational/Tactical Enforcement to Combat Terrorism (PROTECT) project. PROTECT is a system that makes use of game theory for scheduling patrols to protect American ports. Game theory is the study of mathematical models that support strategic decision-making.

The PROTECT system is designed to aid Coast Guard command centers in improving results obtained with limited resources by strategically deploying Coast Guard vessels for maximum effectiveness. The Research and Development Center spearheaded the pilot testing of PROTECT in the Ports of Boston and New York and, after extensive evaluation and review, is now working to deploy it in ports across the nation.

The prize is named for the late Dr. Wagner who strove to apply mathematics to practical problems, supported by clear and intelligible writing. The prize reflects those principles by emphasizing good writing, strong analytical content and verifiable practice successes. His company, Wagner Associates, Inc., conducted leading-edge mathematical work in naval tactics, including anti-submarine warfare, detection theory and search planning. Many of the mathematical and operations research applications he developed for the U.S. Navy and Coast Guard are still used today.

For more information on the Coast Guard's Wagner Prize presentation, visit https://www.informs.org/Recognize-Excellence/INFORMS-Prizes-Awards/Daniel-H.-Wagner-Prize-for-Excellence-in-Operations-Research-Practice.

For more information on the Coast Guard Research and Development Center and ongoing Research, Development, Test and Evaluation projects, visit: http://www.uscg.mil/hq/cg9/rdc/default.asp

CREATE Studies Impact of Customs and Border Protection Inspections on the U.S. Economy

Mon, 08 Apr 2013 17:00:00 -0800

USC announced today the National Center for Risk and Economic Analysis of Terrorism Events (CREATE) completed a study that estimates the impacts of wait times at major ports of entry on the U.S. economy due to changes in customs and border officers staffing.

The study concludes adding 33 customs and border protection officers (1 at each of the selected 33 land and airport locations studied) will potentially lead to an increase in GDP of $61.8 million and employment gains of 1,053 jobs in the U.S.

"We estimate that every additional officer, if placed at ports of entry with high traffic volume would, on average, lead to 33 additional jobs being stimulated indirectly in the U.S. economy," said Adam Rose, principal investigator of the study and Professor of Public Policy at the USC Sol Price School of Public Policy. He also noted this outcome is not a standard "multiplier," which pertains to ordinary economic activity, but instead refers to the gains from alleviating potential bottlenecks at peak times.

Inspection of people and vehicles at U.S. border crossings are vital to homeland security. The benefits of these activities include the avoided losses in terms of lives, property and economic activity resulting from a terrorist attack. However, inspections, which are part of U.S. Customs and Border Protection's mission of enforcing hundreds of U.S. laws, generate various spillover effects relating to the delays in the flows of passengers and cargo across U.S. borders.

On the passenger side, delays decrease the amount of tourism and business travel into the Country, and thus an associated loss of spending stimulus. On the freight side, delays translate into increases in various explicit transportation costs, such as additional fuel. Implicit costs such as the value of lost time impact both.

Reducing wait times for passenger vehicles and trucks at land-based U.S. ports of entry and for airline passengers at U.S. airports, through the addition of customs and border officers, will reduce these negative spillover effects and generate a significant savings to the U.S. economy.

In turn, reduced wait times at land crossings increase the number of visitors from Canada and Mexico, whose spending stimulates the U.S. economy. Also, the reduction in wait times results in lower transportation costs, which makes goods imported from Canada and Mexico cheaper. This not only expands trade from these countries, but helps U.S. companies who use these goods as inputs into their manufacturing processes increase the competitiveness of U.S. exports worldwide.

Operations research and economic analysis methods were used to translate changes in security expenditures into changes in wait times and then to changes in travel demand, business transportation costs and to the value of an individual's time. Other major contributors to the study were outside consultant Bryan Roberts and CREATE team members Isaac Maya, Nathaniel Heatwole, Dan Wei, Misak Avetisyan and Oswin Chan.

Established in 2004 as a Department of Homeland Security Center of Excellence and funded by the DHS Science and Technology Directorate, CREATE is an interdisciplinary national research center based at the University of Southern California in the Sol Price School of Public Policy and the Viterbi School of Engineering. The Center is focused on risk and economic analysis of homeland security-related topics.

The complete study can be viewed HERE.

Erroll Southers Featured in Army Video: Veterans Transitioning to Homeland Security

Sun, 07 Apr 2013 09:46:01 -0800

VIEW VIDEO

CREATE Releases New Economic Study on Ports of Entry Inspections

Sat, 06 Apr 2013 10:44:14 -0800

View Official Study

CREATE Using Game Theory to Study Resource Allocation

Mon, 18 Mar 2013 14:08:55 -0800

With just under four million square miles and 315 million people to protect, the Department of Homeland Security (DHS) faces a daunting task. Terrorists can strike anywhere, from symbolic targets to vital assets across the nation.

CREATE researcher Dr. Jun Zhuang, assistant professor in the Department of Industrial and Systems Engineering at the University at Buffalo, the State University of New York (SUNY-Buffalo), and his former Ph.D. student Dr. Xiaojun Shan, argue that game theory is the most effective way of allocating limited resources to such a large area. They have recently published two papers that outline effective strategies.

In "Hybrid Defensive Resource Allocations in the Face of Partially Strategic Attackers in a Sequential Defender-attacker Game," they conclude that defensive resource allocations based on game-theoretic models are ideal. In "Cost of Equity in Homeland Security Resource Allocation in the Face of a Strategic Attacker," they analyze "the tradeoff between equity and efficiency in homeland security resource allocation."

"In general game-theoretic models incur less expected loss than non-game-theoretic models," Dr. Zhuang said. "The significance is that when making decisions about a large but limited amount of defensive resource allocations, the general guideline would be to adopt game-theoretic reasoning."

The allocation of funding is often controversial, especially when special interests factor into the equation. The researchers studied five types of equity allocation: per-target, per-valuation, per-capita, per-population density, and per-weighted capita. For per-capita resource allocation, they found that Wyoming received a significantly larger amount than California.

"We agree that it could be more efficient to determine homeland security resource allocations based on the strategic and symbolic value of locations," Dr. Zhuang said. "However, to the best of our knowledge, there is no precise estimation of the strategic and symbolic value of locations."

The most effective allocation method, according to Dr. Zhuang, takes the strategic and symbolic value of locations into consideration.

"The model we developed provides a general framework, which could take the data of the strategic and symbolic value of locations once they are available in order to derive more insights," he said. "Game-theoretic models seem to suggest allocating more resources to targets with higher values."

From a policy standpoint, this suggests that some states are unlikely to receive DHS funding.

"Whether some states need little or no money from the federal government for homeland security would be a practical decision based on several other factors such as consideration of symbolic meaning of locations," Dr. Zhuang said. "We could argue that it could be systematically optimal if some states receive little or no money from the federal government for homeland security, in order for other states that are more valuable or more vulnerable in the homeland security context, to receive more money."

Dr. Zhuang is not the only person advocating for a smarter way to allocate DHS funding. In "Safety at Any Price--Assessing the Impact of Homeland Security Spending in U.S. Cities," Sen. Tom Coburn, a member of the Homeland Security and Governmental Affairs Committee, argued that "DHS needs to implement a systematic approach to define and measure the preparedness capabilities it desires."

"This may include better risk definition, risk assessment, public-private partnership, and measuring cost effectiveness of all alternative defense measures," Dr. Zhuang said.

Now Accepting Applications for the 2013 Executive Program in Counter-Terrorism

Mon, 11 Mar 2013 12:46:51 -0800

The Executive Program in Counter-Terrorism at the University of Southern California (USC) is a unique course designed to challenge international counter-terrorism leaders and enhance their analysis, coordination, and response capabilities to the evolving terrorism threat. The program is structured specifically for public sector professionals and policymakers and employs an interdisciplinary academic and experiential learning environment.

Participants will strengthen their cross-functional skills through immersion in key issues and best practices presented by world-class research and public policy experts in counter-terrorism. In addition, the program fosters academic, professional, and personal development amidst a diverse group of peers from across the country and around the world.

The program is a six day course that will be held July 28, 2013 - August 2, 2013.

Application Process
Applications are due no later than June 1, 2013. The online application requires submission of a statement of professional interest and a letter of endorsement from the candidate's employer or government agency. Qualified candidates are admitted on a rolling, space-available basis. Early application is strongly encouraged as space is limited.

2013 Timeline
June 1 ..... Applications Due
June 28 .... Deadline to Accept and Payment is Due
July 28 ... Program Start

Admission Requirements
Public sector executives are encouraged to apply. Admission is selective and based on professional achievement and organizational responsibility. A Bachelor's degree and proficiency in written and spoken English are required.

Applying to this program requires online application submission to include a letter of endorsement from the candidate's employer on appropriate agency letterhead.

Program Goals
The CREATE Summer Executive Program has two high impact goals. It is intended to (1) institute best practices in counterterrorism problem solving and (2) facilitate and enable informed networking of public and private officials for homeland security success.

Instructed by academic, research and governmental experts from around the world, each of the one-day program modules in the Executive Program offers contemporary lectures, interactive problem solving focused discussions and site visits on selected topics related to detection, deterrence and preparedness for counter-terrorism events. The program modules are aligned with the divisions of the U.S. Department of Homeland Security's Science and Technology Directorate.

Program Fee
The program fee for the six-day course is $5,000. This fee covers tuition, materials, accommodations and meals (breakfast, lunch and two scheduled dinners). For Los Angeles area residents not requiring lodging, the fee is $4,500.

USC Viterbi School of Engineering continuing education units are available for this program upon request. They are not degree credits, but may be utilized for career advancement depending upon participants' agency requirements.

About CREATE
Established in 2004, CREATE is an interdisciplinary national research center based at the University of Southern California in the Price School of Policy and the Viterbi School of Engineering and funded by the U.S. Department of Homeland Security. The Center is focused on risk and economic analysis of terrorism and disasters.

For more information, please visit http://create.usc.edu/education/executive_program/ or email create@usc.edu.

LISTEN: CREATE Director Steve Hora Interviewed about ARMOR-PROTECT Rollout

Wed, 06 Mar 2013 10:07:09 -0800

LISTEN TO CBS RADIO INTERVIEW

Last month, CREATE's ARMOR-PROTECT was deployed at the ports of Los Angeles and Long Beach. CREATE director, Steve Hora was interviewed on Openline to explain the origins of the academic research project-turned-technology and how it is being used to make a real world impact.

Developed by USC computer scientist and CREATE researcher Milind Tambe, the Port Resilience Operational/Tactical Enforcement to Combat Terrorism system (ARMOR-PROTECT) uses complex algorithms to randomize U.S. Coast Guard boat patrol schedules to stymie would-be terrorists and increase security.

ARMOR-PROTECT extends to the maritime domain the Assistant for Randomized Monitoring Over Routes (ARMOR) software that was successfully deployed at Los Angeles International Airport to schedule vehicle checkpoints and canine patrols.

The Coast Guard deployed ARMOR-PROTECT on Feb. 1 at the ports, which together rank No. 8 in the world by container traffic. The Coast Guard is currently vetting the software program with the hope of eventually rolling it out nationally, said Craig Baldwin, the Coast Guard's program manager for ARMOR-PROTECT. The United States currently has 361 ports.

LINK TO FULL STORY OF ARMOR-PROTECT ROLLOUT

CREATE Technology Used by US Coast Guard at Ports of LA and Long Beach

Thu, 28 Feb 2013 15:43:16 -0800

From the Long Beach Press Telegram
By Karen Robes Meeks

Officials at the U.S. Coast Guard are now using USC-designed anti-terrorism software to maximize security patrols at the nation's busiest seaports, the university announced Wednesday.

Earlier this month, the ports of Long Beach and Los Angeles implemented ARMOR-PROTECT, a program that uses a series of mathematical equations to randomize security patrols while giving maximum protection to high-level targets such as bridges, terminals and piers.

University of Southern California computer scientist Milind Tambe, who created the program with federal funding by the National Center for Risk and Economic Analysis of Terrorist Events, based the program on a mathematical game theory that anticipates the various outcomes of an attack from adversaries and applies to a number of scenarios that the Coast Guard would encounter.

"We have many things to protect and there's just not enough security resources to be available all the time, and therefore we have to deploy our security resources taking into account different targets that have many different levels of importance," Tambe said.

The program, already implemented at the ports of Boston and New York, is being vetted by the Coast Guard with the hopes of implementing it at the rest of the nation's 361 ports, said Craig Baldwin, the Coast Guard's program manager for ARMOR-PROTECT. A similar program led by Tambe was used at the Los Angeles International Airport for scheduling vehicle checkpoints and canine patrols
and, most recently, on the Los Angeles Metro system, which help catch people who don't pay fares.

The program's success at LAX prompted federal air marshals to use the ARMOR-IRIS software system to randomize schedules.

"Coast Guard men and women work throughout the ports performing maritime safety and security, law enforcement, emergency response, environmental protection and regulatory duties," Capt. Jim Jenkins, commander of Sector Los Angeles-Long Beach, said in a statement. "With these tremendous responsibilities, we welcome the ARMOR-PROTECT model, which is designed to better optimize the use of Coast Guard and partner resources, thereby, strengthening our overall security operations."

Port officials said the program will boost the already stringent security measures that are in place.

"The local agencies look to the U.S. Coast Guard as the federal maritime security coordinator for programs such as this to keep us well prepared," Chief Ronald Boyd of the Los Angeles Port Police said in a statement. "Our port complex is viewed as a maritime leader in addressing security concerns."

View Article

CREATE Researcher Adam Rose Presents to the OECD: Business Interruption of Disasters

Mon, 07 Jan 2013 15:46:25 -0800

When a terrorist attack occurs, much of the attention focuses on the physical damage.

But as Dr. Adam Rose has illustrated in his research, business interruption is often the costliest aspect. This is why the Coordinator for Economics at USC's National Center for Risk and Economic Analysis of Terrorism Events (CREATE) believes business interruption insurance is such a vital component of resilience to disasters.

Dr. Rose spoke recently on this topic at an (Organisation for Economic Co-operation and Development (OECD) meeting in Paris. Titled "The Future of Terrorism Risk and Insurance Markets," the second annual meeting gathered scholars, industry experts and government officials to discuss policy.

"One of the major purposes of insurance is not just to have somebody recoup their losses, but to get the economy back up and running," Dr. Rose explained. "Rebuilding a factory is not always enough. The company has lost profits over the course of the year, and it may not have any operating cash to work with. This restores the company's cash flow so that they can move forward."

From September 11th to catastrophic earthquake scenarios, Dr. Rose has published the definitive studies on the economic impacts of the biggest disasters this country has faced and could potentially face over the last two decades. In many of these cases, losses from business interruption exceeded property damage.

"The businesses interruption part is much more complicated than property damage because it is subject to behavioral conditions and policy," Dr. Rose said. "What resources we bring to bear, how much outside aid is forthcoming, and how quickly we rebuild are more complicated variables that you have to look into."

Dr. Rose added that additional clarification regarding business interruption insurance is necessary.

"If you bought a business interruption policy and you can get compensated for your losses, why should you scramble to get back on your feet?" he explained. "Or if you go to a temporary location you might be concerned about a clause that says you've recovered when you really haven't."

Additionally, Dr. Rose recommends that governments act as a safeguard for insurance policies in cases of cataclysmic events.

"The federal government has laws in place, such as the Terrorism Insurance Program Reauthorization Act of 2007, that have it serve as a backup when you got cases of large losses," he said. "That is something that needs to be maintained in terms of the government backing up the insurance industry. And that is something that might unfortunately be cut in the course of the current fiscal negotiations Washington."

A major challenge, according to Dr. Rose, is motivating lawmakers to pass legislation during times of calm.

"You have a big event and people get psyched up in terms of initiating a policy while it's on everyone's minds, and then after a couple of years if there is no additional event that takes place people start to think that this type of protection is unnecessary," he said. "That is very shortsighted."

Rose pointed to CREATE affiliated faculty Howard Kunreuther and Erwann Michel-Kerjan of the Wharton School as doing path-breaking research on human behavior in purchasing insurance protection and government policy implementation as complementing his own research on business interruption and resilience to disasters.

VIEW DR. ROSE'S PRESENTATION

Measuring Economic Resilience to Disasters

Thu, 27 Dec 2012 12:24:30 -0800

Resilience has become a popular buzzword, and that has detracted from its potential to reduce losses from disasters. Researchers at CREATE have studied the topic for several years and made several major advances.

First, they have provided a definition of the term that is consistent with definitions from the perspectives of engineering, ecology, sociology, and organizational behavior. Essentially, resilience in general can be defined as actions that enable a system to maintain function and recover rapidly. From an economic perspective, this corresponds to using remaining resources as efficiently as possible and to investing in the repair and reconstruction promptly and wisely.

More importantly, CREATE researchers have developed an operational metric for resilience. For the static version--maintaining function--the metric is the avoided damages divided by the maximum potential damages. This metric has been applied by Adam Rose and his research team in a number of studies of actual events (e.g., the 2001 World Trade Center attacks, and London subway/bus bombings) and simulated disasters (e.g., disruption of the Los Angeles water and power systems, shutdown of a major seaport, and impacts of a catastrophic earthquake). For example, the researchers found that resilience just from the relocation of businesses reduced potential business interruption losses from the World Trade Center attacks by 72 percent in the aftermath of 9/11.

Adam Rose, CREATE's Economics research theme lead who has completed numerous projects for the center many of which can be found HERE, made a presentation entitled, "Measuring Economic Resilience to Disasters," at the Santa Fe Institute's (SFI) Annual Trustees and Business Network Symposium. The November 2012 Business Network and Trustee Symposium focused on the topic of resilience and its role in ecosystems, financial markets, social systems, and other networks.

SFI is a world-class research organization focusing on interdisciplinary approaches to "complexity". In-house faculty at SFI are leaders in various related fields, and the organization boasts faculty affiliates from universities such as Harvard and Yale, as well as affiliates from the World Bank and several major private companies.

Dr. Rose shared the program with researchers from a broad spectrum of fields, including others who spoke about disasters, as well as speakers focusing on resilience in response to climate change, financial crises, and the evolution of businesses.

Dr. Rose's work on computable general equilibrium (CGE) modeling fit well within the SFI focus on complexity. A simple interpretation of complexity focuses on interdependence of systems. In fact, CGE models treat the economy as a set of interconnected supply chains connected through individual behavior and markets.

VIEW DR. ROSE'S PRESENTATION

CREATE's Detlof von Winterfeldt Receives Highest Honor by the Society for Risk Analsyis

Thu, 20 Dec 2012 14:51:37 -0800

Professor Detlof von Winterfeldt, former director and co-founder of CREATE, was presented the Distinguished Achievement Award at the Society for Risk Analysis at its annual meeting in San Francisco in December 2012. This award is given annually to an individual for extraordinary achievement in science or public policy relating to risk analysis and making a significant contribution to the field of risk analysis.

In the presentation of the award, the society president Prof. Ann Bostrom stressed the fundamental role that Prof. von Winterfeldt's book Decision Analysis and Behavioral Research, co-authored with Prof. Ward Edwards, has had in educating risk analysts for the past two decades.

Professor von Winterfeldt also has made significant contributions to both the theory and practice of risk analysis and has been a leader in applying risk analysis to significant problems. He is recognized as one of the pioneers promoting and using risk analysis on homeland security decisions to better inform decision-makers.

Previous winners of the Distinguished Achievement Award of the Society for Risk Analysis include Chauncey Starr, Howard Raiffa, Gilbert White, William Ruckelshaus, Paul Slovic, Lester Lave, and Kenneth Arrow.