Is the Tail Wagging the Dog? What is the Risk of Catastrophic Terrorism?

Abstract:     
This paper models the stochastic behavior of large-scale terrorist events using extreme value methods. We utilize a unique dataset composed of roughly 24,000 observations. These data provide a rich description of domestic and international terrorism between 1968 and 2005. Currently a credible worst-case scenario involves the loss of between 5,000 and 10,000 lives. However, the return time for events of this magnitude is shortening every year. Today the primary threat is from conventional weapons rather than from chemical, biological and/or radionuclear (CBRN) weapons. However, pronounced tails in the distribution of CBRN incidents suggests that this threat cannot be dismissed.

Keywords: biological weapons, bioterrorism, catastrophic terrorism, chemical weapons, extreme value theory, nuclear materials, risk assessment, terrorism

JEL Classifications: C0, C4, C5, H56

Working Paper Series