Terrorism PLC. Funding spectaculars and catastrophic risk in law
| Date | 01 April 2006 |
| Pages | 141-156 |
| Published date | 01 April 2006 |
| DOI | https://doi.org/10.1108/13685200610660961 |
| Author | Sally Leivesley |
| Subject Matter | Accounting & finance |
Terrorism PLC
Funding spectaculars and
catastrophic risk in law
Sally Leivesley
Newrisk Limited, London, UK
Abstract
Purpose – To describe anticipatory risk as a fundamental pillar for a framework of international law
in relation to global terrorism.
Design/methodology/approach – Economic terrorism and global terrorist transactions are used as
a case study to demonstrate asymmetric financial crime and vulnerabilities of financial districts,
economies and populations.
Findings – The act of anticipation of risk is quantifiable and imposes a duty to manage foreseeable
catastrophic consequences. Such a duty in turn creates a proportionate reaction that can be recognised
in law.
Practical implications – Recommendations are made for international discussions by jurists,
global agreements through the United Nations and the G8 and for national laws, corporate governance
standards and regulatory measures to become a seamless extension of the international framework.
Originality/value – Commercial law, criminal law and the international laws and conventions of
war require a framework that defines foreseeability, catastrophic risk, uncertainty, adequacy and
proportionality.
Keywords Risk assessment,Terrorism, Economic forecasting
Paper type Case study
Definitions
Risk. The possibility of suffering harm or loss; danger[1].
Anticipatory risk. Risk that is assessed by an individual or entity.
Catastrophic risk. Risk of losses that cannot be recovered; losses to the critical functioning of
the individual, entity, system or society.
Foreseeability. Risk that can be anticipated.
Proportionality. Balancing actions within context of the risk.
Reasonable. Test of the man on the Clapham omnibus – what a reasonable person might be
expected to do considering the circumstances and the foreseeable consequences[2].
Adequate. Maintaining system recoverability and critical functions.
Credible. Normative calculation based on known factors.
Asymmetric attacks. Small, focused or shaped resources applied to critical functions to bring
about a collapse either, of an individual (e.g. life is dependant on critical functions of the
body); an entity (business continuity is a critical function) or the society (instability from
weakness in government, economy, health and welfare of the people).
Terrorism PLC. International terrorist networks using economic crime and/or engaging in
economic attacks.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
Terrorism PLC
141
Journal of Money Laundering Control
Vol. 9 No. 2, 2006
pp. 141-156
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200610660961
Introduction
To date “Terrorism PLC” is known to have used international financial transactions to
fund spectacular attacks against critical financial infrastructure and people in more
than forty countries. This has created a new dimension of foreseeable risk in corporate
governance and a new economic threat generated by asymmetric financial transactions
across the world.
Before the 9 November attacks in New York, financial transactions of small value
were not widely investigated as possible funds for spectacular terrorist attacks or
associated with catastrophic risk. The asymmetric financial funding of spectaculars
has though become apparent since 9 November. However, it must be apprec iated that
the systems required to identify, control and if possible prevent such asymmetric
financial transactions are not necessarily the same as those now generally applied to
white collar crime or organised crime (unrelated to terrorism), where the pattern is
usually of significant or regular transactions that may indicate money laundering of
criminal proceeds. This is because such asymmetric activities are not an end in
themselves but can instead be regarded as an invisible risk, which is only recognised
as such when it breaks in the form of an unexpected catastrophic attack. The
asymmetric consequences of mass casualties and destruction coming with zero
warning time add to the shock of the attack.
There are then two aspects to be considered here the “anticipation of risk” and
preparedness for dealing with “catastrophic risk”.
The nature of anticipatory risk and catastrophic risk
Asymmetric economic terrorism provides a case study of patterns of asymmetric
attacks, as this form of terrorist attack reflects global terrorist behaviour across the
whole range of crimes against society that Al Qaeda (including affiliates of Al Qaeda
and groups or networks patterning their crimes on those of Al Qaeda), are perpetrating
in over 40 countries.
International terrorism has the potential to cause massive disruption and social
destabilisation through catastrophic attacks on central financial districts or on critical
support services such as airlines, water and electricity supply or telecommunica tions
networks, the disruption of which can cause a serious loss of market sector continuity.
In the most extreme cases high explosives, chemicals, biological agents, rad iological
“dirty bombs” and improvised or acquired nuclear weapons can create mass casualties
and panic with economic destabilisation and losses in global financial service markets
and some other market sectors. It should also be recognised that disruption (in the
sense used here) includes the mere threat of such asymmetric attacks, as the threat
itself can have a profound if subtle economic impact in financial markets and in
particular global liquidity. Catastrophic risk is therefore to be considered as the top end
of any risk dimension.
Spectacular attacks on central financial districts cannot be identified in advance by
traditional measures of probability because these are created by terrorists using
unusual factors to breach critical protections in the physical, electronic, security and
other barriers to financial disruption. Risk is defined as possibility of loss and with
catastrophic risk there are an almost infinite number of factors that can be brought
together at a certain time to create asymmetric destruction. At the catastrophic end of
the risk dimension probability is no longer a useful measure. Catastrophic risk can be
JMLC
9,2
142
To continue reading
Request your trial