**3.3. Terrorism**

160 Risk Management – Current Issues and Challenges

belongings.

There is a significant problem with the theft of cargo worldwide. It is estimated that theft represents a loss of at least US\$10 billion per year in the United States and US\$30 billion worldwide [16]. The value of cargo theft for the European Union is estimated to be €8.2 billion annually, an average value of € 6.72 per trip [17]. Gathering accurate numbers for cargo theft losses is difficult or impossible in many cases, due to limited reporting by the transport industry and the lack of a national law enforcement system requiring reporting and tracking uniformity [18]. Despite these figures, cargo theft generally has a low priority

A problem related to cargo theft is the theft of vehicles and the lorry-driver's private property. There are many reasons behind a truck theft, but they can be described basically with three main characteristics - value, cargo carrying ability, and valuable documents [3]. *The first characteristic,* value, represents the truck's value as all objects and can be sold and exchanged for money. *The second characteristic, carrying ability,* refers to the general propose of a truck. The vehicle and its load were targeted in 63 percent of the attacks [19]. The truck can be stolen with the current load where the goods are the desirable object and the truck is only the simplest method to move the goods to a warehouse or to another truck for further

*The third characteristic* of theft problems toward freight is the attack for the lorry-driver's private property or other types of valuable documents such as credit cards, mobile phones, and digital cameras stored in the truck during transport. According [19], 17 percent of all drivers suffered an attack during the past five years, 30 percent were attacked more than once. Of all drivers attacked, 21 percent reported they were physically assaulted during the attack [19]. This type of attack represents a considerable amount of the total, but nothing was stolen in 38 percent of attacks against trucks [20]. However, even if nothing was stolen it was still a crime against a part of the transport network and therefore shall be seen as an antagonistic threat. 70 percent of attacks against road transports occur between 22:00 in the evening and 06:00 in the morning [19]. Therefore, it is possible to state that time of day plays an important role in antagonistic threats. According [19], the direct cost for an attack is approximately €25000 per attack, including theft of vehicles, load and the driver's personal

Regardless of which of the three characteristics of theft problems the motivated perpetrator uses, there is a number of commonly defined modus operandi or methods to attack trucks. These different modus operandi are used differently depending on where the attack is executed. The different locations are described in terms of different steps in a road transport from consignor to consignee, which starts with loading the goods and ends when unloading them. Eurowatch has developed a threat/risk matrix based on the data on cargo theft in road transports over a seven-year period [23]. The matrix presented in Table 1 maps modus

A quick analysis of the matrix points out some obvious relationships. The method *fake accident* is best suited to deceive a truck driver to stop during driving and then conversion to a hijack. The same course of events can be created with the use of *fake police* tactics. The

status in most countries and is often perceived largely as the cost of doing business.

movement. A truck also can be stolen for other criminal activities.

operandi and location of attacks against each other.

The word "terror" is a Latin word meaning "to frighten." Consequently, a terrorist is a person that intends to frighten others through fear. The term terrorist/terrorism is itself controversial because its key signature is political and it has been used by states to illegitimatize political opponents. This leads to a vindication of the state's own use of terror against its opponents [27]. The lack of a universal definition of consequence of this is best explained with the cynical comment "*that one state's terrorist is another state's freedom fighter*". Regardless, terrorism is definition by [28] as, "*Terrorism is not an ideology or movement, but a tactic or a method for attaining political goals.* Terrorism is one of the major obstacles for meaningful international countermeasures.

The World Trade Centre terror attack in 2001 changed the world and the conditions for logistics worldwide. The aftermath of the terrorist attacks clearly indicated that logistics operations will suffer consequences of an attack. [29] state that, "*over the longer term, there is a question of whether the attacks can have a negative impact on productivity by raising the costs of transactions through increased security measures, higher insurance premiums, and the increased costs of financial and other counterterrorism regulations"*. The motivation for the majority of terrorist attacks is because the perpetrator intends to influence and alter the current balance of power in a certain direction [30]. Both the current balance of power and the potential effects on it may only be understood within the perpetrator's own mind. Therefore, the non-economically driven antagonistic threat is more nuanced, uncertain, and harder to predict that other types of antagonistic threats. According to [31] the fear for terrorist attacks is an extreme form of perceived risk. The definition of terrorism influences the difficulty to present valid statistics for the category, because one source may classify an incident as a terrorist act while another considers it to be a "regular" crime. According [28] is the official reported number of terrorism attack in EU declining (581 attacks in 2007 and 294 attacks in 2009) and the major threat (in numbers) comes for separatist movements (Basque and Corsican) whiles Islamist terrorism is still perceived as the biggest threat.

Supply Chain Security – Threats and Solutions 163

The official statistics for terrorist attacks indicates that, in order to understand terrorists, it is better to focus on possible attacks instead of probability for attacks. In accordance with this, there is no objective [33] way to determine who is a terrorist and who is not. It has all to do with the context to the terrorist threat. This follows the same logic when terrorism is presented as black swan problem [34]. Nevertheless direct and indirect effects from a terrorist attack or threat will affect the global flow of goods and thereby, to different extent,

The primary target of illegal goods is the black market. The black market consists of places and situations where products with doubtful or no legality are traded for money. This market is subject to the same forces of supply and demand as legal ones. Buyers of these illegal products are everywhere. Statistical reports show that counterfeited and pirated items amounted to \$176 billion in Europe in 2007 [35]. According to [36], in 2006, nearly 3 million pharmaceutical products were found to be counterfeit. Product smuggling does not necessarily mean that the product is illegal everywhere. What is legal in one country can be illegal in another, which creates the possibility that the actors in smuggling can be legal companies that are trying to access a market that is prohibited for them. An example of this is Western companies that smuggled products into former communist countries during the

The supply of a typical black market (both authorities and customers knows that the product is illegal) can be illustrated with the illegal smuggling of cocaine to USA. The illegal drug supply chains come mainly from South America. This depends on that the raw material, coca leaf, is grown there. The smugglers use land, sea, and air routes to get past US authorities. The whole distribution of cocaine is controlled by Colombian-based organized crime, but in recent years it has started to cooperate with Mexican criminals to streamline the logistics and share the risks. The Colombians have organized their operations in a business-like manner, creating cells for special purposes like warehousing or transport [37]. According [38], the illegal drug markets are best understood as having high adaptation and great resilience to always supply their products to the end user. This resilience and adaptive ability is clearly found in the logistics system setup and can be understood and explained with the concept of risk for

The supply of a typical gray market (only authorities know that the product is illegal) can be illustrated with the illegal smuggling of counterfeited products. The gray market involves the diversion of goods from legitimate supply chains [39]. The only distinction is the risk for discovery from the authorities or the company whose products are copied. This diversity leads to a different design of the supply chain. The location of the production facilities is subject to the risk of discovery. Normally, counterfeited production units are placed where the risk for detection is low combined with the normal business problem as different types of costs and quality aspects. A counterfeited supply chain uses

the global economy.

Cold War era.

detection presented in this paper.

**3.4. Smuggling of goods** 

The modern or new thing with terrorism is not the use of violence to influence and alter the current balance of power in a certain direction. According to [32] is: *"Terrorism in all its forms, by its very nature, an asymmetrical response to superior force, and terrorist have always used their capabilities as force multipliers – usually through the exploitation of terror. The generation of fear, in effect the use of purposeful violence as a form of psychological warfare can now be carried much further, enhanced by the modern media and the proliferation of mass media as much as by the proliferation of weapons".* The new thing with terrorism is therefore more related to development in media technologies than to vulnerabilities in supply chains. Nevertheless, terrorism is a special form of antagonistic threat that needs to be managed, in one way or another.

Reviewing official terrorist statistics from one global source (MIPT Terrorism Knowledge Base) leads to the following transport related conclusions:


The terrorists prefer to use bombs and armed attacks because 80-90 percent of all attacks used these tactics. The targets are rarely transports but more in form of police and other governmental or religious institutions (~53% of the attack 2006). The interesting feature is related to the geographic side of terrorism, because the terrorist threat is mainly linked to local/country/regional contexts.

The official statistics for terrorist attacks indicates that, in order to understand terrorists, it is better to focus on possible attacks instead of probability for attacks. In accordance with this, there is no objective [33] way to determine who is a terrorist and who is not. It has all to do with the context to the terrorist threat. This follows the same logic when terrorism is presented as black swan problem [34]. Nevertheless direct and indirect effects from a terrorist attack or threat will affect the global flow of goods and thereby, to different extent, the global economy.
