Business Continuity and Homeland Security, Volume 1
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Business Continuity and Homeland Security, Volume 1

The Challenge of the New Age

Edited by David H. McIntyre and William I. Hancock

A practical and timely study on how businesses need to prepare for natural and man-made disasters. What should businesses consider in preparing for terrorist attacks, natural disasters, pandemic illnesses and other emergencies? What steps can a business take to ensure continuity during and after a crisis? What can we learn from past success?
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Chapter 8: Transcending the Consequences of Terror on Business

Dean Alexander


Dean Alexander A danger foreseen is half avoided. (Thomas Fuller, British Clergy and Historian, 1608–1661) INTRODUCTION The broad ramifications of terror on business will be discussed accordingly in this chapter: terror costs in terms of outlays and rising transaction costs; security at a business location; interactions with customers; ramifications on sourcing, inventory and logistics; and legal issues. COSTS Terrorism is relatively easy and inexpensive to activate yet very difficult and extremely costly to counter. These costs are ongoing and likely will rise in the future. The costs arising from 9/11 have run into the hundreds of billions of dollars if one includes direct and indirect effects. Some of the costs, such as security and military expenditures fueled by those incidents, are foreseen to increase annually. Private sector security costs alone are estimated at $100 billion yearly. Fortune magazine estimated that economic ‘friction’ due to terrorism, as exemplified in higher expenditure by business – logistics, insurance, workplace security, information technology, travel and transportation, and workforce – will cost companies about $150 billion annually. Other terror-related costs attach even though they are outside the security rubric. In fact, some expenditure is entirely defensive though not security related. At the time of this writing, the American Hospital Association projected that US hospital systems will require nearly $10 billion to react adequately to a massive biological, chemical or nuclear terror attack. Terror attacks against economic targets have resulted in significant financial costs worldwide. The Provisional Irish Republican Army (IRA) exploded a large bomb outside the...

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