Estimating the Impact of a Terrorist Attack on an Urban Area. Some disasters lead to social, political or economic consequences that go beyond the direct harm they cause. Hazards that are poorly understood or potentially catastrophic are especially prone to complex consequences. For example, technologies such as nuclear power are difficult for the layperson to understand and are thought to have potential to contaminate large numbers of people. As a result, they generate high perceptions of risk. Conversely, natural disasters are better understood, and protective actions are more widely accepted by the public. Hence, they inspire less concern. How perceived risk amplifies and leads to potentially large economic impacts is depicted in Figure 1 above.
Feedback Mechanisms. In Figure 1, we see that when a mishap occurs it has a number of direct and often immediate effects. For example, there are economic costs of actually responding to the disaster, there is an emotional response to the disaster on the part of the public, there is a need for the community and its institutions to intervene and of course the media will begin reporting on the event. However, these direct effects also put into motion indirect effects that at first amplify public response and then dampen public reaction. For example, an amplifying loop is formed when negative emotions like fear lead to heightened perceived risk which increases activity in social media which in the short run leads to avoidance behavior (e.g. avoiding impacted areas) which prompts more media coverage which increases negative emotions. These heightened concerns translate into long-term economic consequences principally through decreases in the consumptions of goods associated with the affected area, increased demands for higher wages to work in these areas, and higher expected rates of returns by business people to invest in the impacted region. Conversely, if communities are prepared to respond to disasters they will decrease perceived directly by actually reducing the risk and indirectly through the use of risk communication that bolsters public confidence which prompts the public to engage in risk-reducing activities (e.g. sheltering in place, taking antibiotics, evacuating certain disaster zones) which decreases perceived risk. When this balancing loop becomes stronger than the amplifying loop public response to the disaster begins to subside. However, even after the public and media move past the event there are often large secondary economic ripple impacts (e.g. reduced GDP for the region).