In the world we live in today it is very difficult to ignore the fact that international terrorism is very present and it is present everywhere. Random acts of violence have been happening for the several last decades bringing with them death and destruction. Such acts do not only affect political stability and people’s lives, they also have an enormous effect on the economy and of course on business ventures. It is widely known that the attacks on the Twin Towers in New York City, on the 11th of September 2001 have had a significant impact on the American economy. The New York stock exchange simply crashed as a result. This had not been an isolated event, a similar situation was repeated in London, Paris, and Berlin, leading us to the conclusion that terrorism was a substantial obstacle to not only peaceful living but also a lucrative business.
Globalization has certainly played its part in the increasing trends of terrorism because it affected trade, travel, and information transfers which in turn had an effect on economic differences and brought forth ideological competition. The rise of religious fundamentalism also played an enormous part due to its extension to military operations, which has been in constant uprising, particularly in the Islamic world. Also, technological advancement has made many new weapons available to such individuals, weapons which have the power to cause mass destruction such as nuclear, chemical, and biological weapons and thus giving certain interest groups the means to attain deadly power and use it against those who they have deemed had done them wrong.
The most straightforward effects terrorism has can be seen in the loss of life but also in the destruction of infrastructure, buildings, and equipment, even though this doesn’t tend to affect private companies as much as government-owned facilities. It’s the indirect effects of terrorism that are far more widespread and felt by various companies and people because they tend to cause a decline in buyer demand, increase costs of transactions, cause interruptions in international supply chains, and can very well cause a decline in foreign direct investment. They also tend to affect tourism significantly.
Costs associated with terrorism have been known to affect international trade which was again seen after the attacks on the Twins when Ford closed down five of their plants, however temporary and FedEx lost over a hundred million dollars in the first two days after the attacks alone. Such instances have been an incentive for scholars to debate the connection between acts of terrorism and the negative trends in international business. Terrorism produces new impediments to cross-national trade and investment, as national and supra-national governments impose anti-terrorism policies, regulations, and procedures (Czinkota et al., 2004; Spich & Grosse, 2005). Such responses have the potential to alter the commercial environment in ways more harmful to business interests than the terrorist events that provoked them (Czinkota et al., 2004; Enders & Sandler, 2006).
To counteract the effects of terrorism and to stop new terrorist attacks many countries had seen fit to implement new rules and regulations, not just for passengers but also for international shipping, which had decreased its efficiency and increased costs.
Terrorism affects governments, militaries, and private resources because they all need to be extended in order to protect people and property from terrorism. This can be seen in the amounts the United States government alone is spending on their military, let alone international organizations and other countries. Terrorist attacks had called for more vigilance, more police on the streets, more firefighters, and more medical staff, and this all incurs costs.
But they are not the only ones. In order to protect their assets, many companies have started including in the strategies measures on how to counter effects that can be linked to terrorism. In a Gallup International survey (2008) of 61,600 randomly chosen people in 60 countries, out of 13 choices the ‘‘war on terrorism’’ was cited as the fourth most important priority for world leaders (following ‘‘eliminating poverty’’, ‘‘economic growth’’, and ‘‘reducing wars’’).