“EFFECT most important way in which terrorist danger



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This article focuses on fear of terrorism as one
important factors effecting risk taking and investment decision in today’s
economy. We argue that external security threats can undermine incumbent target
governments by exposing foreign policy failures and damaging society’s general
well-being. Identifying who is at risk, how they are at risk in terms of which
cognitive processes are affected, and the degree to which they are at risk.


Terrorism is a hazard to human life and material
prosperity that should be addressed in a sensible manner whereby the benefits
of actions to contain it outweigh the costs. The relationship between fear of
terrorism and risk taking has long puzzled researchers. Research at the
individual level has found little empirical evidence to support the idea that
entrepreneurs take considerable risks (Entrepreneurial Orientation, Risk
Taking, and Performance in Family Firms by Lucia Naldi, Mattias Nordqvist,
Karin Sjöberg, Johan Wiklund). Over the past decade, the changing political
landscape has dictated that public, private, and governmental organizations not
only understand terrorism risk, but also develop a proactive plan to assess
and/or manage this risk. With the increased threat of terrorism, both in the
United States and abroad, public, private, and governmental agencies face an
increased need to understand and manage the risk to their employees and
organizational assets due to the terrorism risk (Managing Terrorism Risk by
Nathan C. Gould)

This paper critically analyses the importance of
risk management techniques in the war on terror. From the protection of borders
to international financial flows, from airport security to daily financial
transactions, risk assessment is emerging as the most important way in which
terrorist danger is made measurable and manageable. However, we argue that the
risk-based approach results in the displacement of risk onto marginal groups,
while its effectiveness in the war on terror remains questionable. Risk is an important
component of every investment, thus it is necessary to analyse it as both, the
objective component of the investment, and as the subjective factor of the
investment decision making. In the war on terrorism, it is important to
understand how power is exercised through a complex policy constellation
including regulatory state bodies, international institutions, industry
self-regulating bodies and private risk assessment firms. This does not simply
entail a shift from public to private authority, but entails more precisely the
enduring and even enhanced power of particular state agencies, in close
cooperation with international institutions and private risk assessment firms
(Governance, risk and

dataveillance in the war on terror, author Louise
AmooreMarieke De Goede).




paper provides evidence for a particular channel terrorism growth in countries.
Using micro-level data surveys during the period in Islamic university Islamabad,
in our research terrorism has significant negative effect on the level of
investment in long-term but effects are small and insignificant for short-term
investment. The presenceof a major terrorist incident in a district in a year
reduces long-term fixedinvestment by around 17% after controlling for district.




Attacks on the World Trade Centre and the Pentagon
in2001, polls in the United States revealed a heightened level of fear and
anxiety about the likelihood of further terrorist attacks. According to one
poll, 52 percent of Americans said they could imagine themselves or a loved one
as a victim of a terrorist attack (Kakutani, 2001). Despite the fact that risk
assessment studies in Australia underline that the actual risk of a terrorist
attack is marginal in comparison to many other mortality risks such as smoking
and car accidents(Mueller,2004;Viscusi, 2003), Australian polls also indicated
heightened levels of fear and anxiety about a possible terrorist attack in
Australia. According to a poll published in the Sydney Morning Herald in April
2004, 68 percent of Australians believed that Australia was at threat of an
imminent terrorist attack (Michelson, 2005; Viscusi, 2003). A national project
at Edith Cowan University funded by an Australian Research Council Discovery
Grant (Safeguarding Australia) examines the nature of the fear of terrorism
operating within the Australian community since the September 11 terrorist
attacks. The projects incorporate qualitative research study on audience
constructions of the media and popular discourse on terrorism. The findings of
this study were used to inform the development of an innovative quantitative
metric of fear designed to measure how Australians are responding to the fear
of terrorism. Research into the effects of fear on social behavior has
traditionally focused on two patterns of behavioral responses to fear:
restrictive behaviors which assume that people constrain their behavior to
avoid circumstances considered unsafe, and assertive behaviors which involves
people adopting protective behaviors in circumstances considered to be unsafe
(Liska, 1988). An analysis of empirical evidence collected was conducted in the
first stage of the project to develop a construct typology of fear (Becker,
1940). The results pointed to the fear of terrorism as affecting both
restrictive and protective behaviors. As the first of its kind, the metric of
fear measures the extent to which Australians are constraining their behaviors
and adopting protective behaviors in response to the fear of terrorism.



Fear of Terrorism

There is no internationally accepted, unitary
definition of terrorism. A brief review of the literature on terrorism reveals
over 100definitions.InAustralia, terrorism is defined by the Australian Defense
Force as the “use or threatened use of violence for political ends or for the
purpose of putting the public or any section of the public in
fear”(Martyn,2002).Among the various definitions of terrorism that exist is the
universal notion that terrorism uses violence ,targets non-combatants, is
intended to intimidate and creates a state of terror. Importantly, all
definitions agree that fear is the ultimate aim of terrorism. Fear is perhaps
the most intense of human emotions and can manifest itself in a variety of
ways. Fear can be a rational response to the presence of a real danger or an
irrational response to an imaginary danger ;it can parlays or it can motivate
;it can serve a political purpose or it can serve a deep  psychological need, it can be instinctive, to
our psychological makeup or it can be historically specific. Private fears,
such as phobias, are legacies of individual psychologies and experiences. The
fear of terrorism however, is typically a community fear arising out of
conflicts between societies. Community fear impels societies tore-affirm their
collective allegiance to a set of common political values and to mobilize
against an identified threat to these values. This often finds expression in
aggression, marginalization, alienation and rejection of anything or anyone who
challenges the shared values and cultural world views of a particular society.
Since the terrorist attacks on the World Trade Centre and the Pentagon on 11
September 2001, a new discourse of terrorism has emerged as a way of expressing
how the world has changed and defining the way things are
today(Altheide,2004).Terrorism has become the new metonym for our time where
the ‘war on terror’ refers to a perpetual state of alertness as well as a range
of strategic operations, border control policies, internal security measures
and public awareness campaigns such as ‘be alert, not alarmed'(Aly, 2005). The
‘atmosphere’ of terror has permeated the construction of the Western world as
constantly at threat of terrorism. The media and political construction of
September 11 and the subsequent ‘war on terror’ is one in which the West is in
a perpetual state of alert from a foreign, alien, politically defined ‘other’,
where, as Brian Massumi (2005) states, “Insecurity…is the new normal” (p. 31).
The evolving media and popular discourse on terrorism frames the war on terror
as a global battle between’ us’ and’ them ‘and’ the West’ and’ others’, whereby
the ‘others’ become the objects of fear, concern and suspicion. Framed in a
rhetoric that portrays it as a battle for the Western values of democracy and
freedom, the ‘war on terror’ becomes not just an event in space and time but a
metonym for a new world order drawing on distinctions between ‘us’ and’ them’
and ‘the West ‘and’ others’ and motivating collective identity based on a
construction of ‘us’ as victims and ‘them’ as the objects off ear, concern and
suspicion. The recued in the ‘war on terro0r’ is characterised by the familiar
invocation of terms like democracy and freedom to make distinctions between
‘the West and the rest’ and to legitimize references to civilized and
uncivilized worlds. In his speech delivered at the United Nations Security
Council Ministerial Session on TerrorismonJanuary20, 2003, Colin Powell invoked
the rhetoric of a clash of civilizations and urged “We must rid the civilized
world of this cancer…. We must rise to the challenge with actions that will rid
the globe of terrorism and create a world in which all God’s children can live
without fear”. US President George Bush, in his address to the joint houses of
Congress shortly after September 11 stated” 
This is the world’s fight. This is civilization’s fight” (cited in Brown
2002, p. 295). The political discourse on terrorism in Australia is one in
which Australia is recurrently portrayed as being at threat of an imminent
terrorist attack. In a series of mediare leases since the September 11 attacks,
Australia’s Prime Minister John Howard has recurrently referred to Australia as
being at imminent threat of a terrorist attack. In
December2002thePrimeMinisterreleasedthefirst of what was to be many
counter-terrorism packages and issued a media release stating “Australia has
been at a heightened level of national security alert since September 11 2001.
This extended period of heightened alert for acts of terrorism is unprecedented
in Australia’s history” (National Security Campaign,2002).Earlier that year,
after the Bali bombings in Indonesia in October, the Australian Prime Minister
announced amendments to Australia’s counter-terrorism laws, reiterated his
previous statements about security and added that the Bali bombings were a
personal attack on Australia, “The terrorist attacks on the United States last
year revealed that we are now operating in a 
new security environment. The Bali bombings tragically brought that
directly and personally home to Australians” (Counter-terrorism review, 2002).
In a media release on the strengthening of the counter terrorism laws, the
Prime Minister stated, “while we have been fortunate not to suffer a terrorist
attack on our soil, Australians have been the victims of attack overseas and
Australia itself has been a target for terrorist in the past”. In reference to
the need for legislative reform, the Prime Minister referred specifically to
the circumstances of the London terror attacks, “The terrorist attacks on the
London transport system in July have raised new issues for Australia and
highlighted the need for further ramen dements to our laws”(Counterterrorism
laws strengthened, 2005). The government’s apparent insistence that Australia
is at threat of an imminent terrorist attack is captured in the National
Security Information Campaign, “Let’s Look out for Australia”, first launched
in December 2002. In September 2004, a new phase of the campaign was launched
entitled “Help Protect Australia from Terrorism” .The campaign includes
television, press, transit and outdoor advertising urging Australians to report
“possible signs of terrorism.


International Security Hotline”. The use of both
visual and print media ensures that the campaign is highly visible to
Australians and communicates a message that Australians need to be consistently
vigilant about the threat of terrorism. The media and popular discourse on
terrorism in Australia has evolved into a debate on the Islamic presence in
Australia portrayed as a clash of cultural values. This discourse has been
assisted by comments from Federal politicians. In an address to the Sydney Institute
on 23 February 2006 on the topic of Australian Citizenship, the Federal
Treasurer, Peter Costello, addressing the audience on Australia’s democratic
tradition stated that those who oppose democratic legislature and do not abide
by Australia’s laws should be refused Australian citizenship. He immediately
followed this comment with a reference to terrorists and those who support them
and then proceeded single out Muslims as those who have “strong objections” to
the Australian values of “loyalty, democracy, tolerance, the rule of law…”
(Costello, 2006). Shortly afterwards, the Federal Government announced its
intention to introduce a formal citizenship test designed to test commitment to
a set of ill defined ‘Australian values’. The construction of the war on terror
as a global battle between ‘the West and the rest’ imbues the fear of terrorism
with redemptive qualities, enabling and facilitating behavioral responses
associated with a reaffirmation of identity and membership of a collective
while simultaneously denying membership to that collective to those perceived
to be” other”. This response has found expression in the perception of Islam,
and by association Australian Muslims, as an alien, culturally incompatible and
ominous other.

The psychological impact of terrorism is not limited
simply to how people function in the wake of discrete attacks. Anticipating
future terrorist attacks can also be extremely debilitating in terms of
psychological functioning (Somer, Tamir, Maguen, & Litz, 2005). Zimbardo
(2003) has referred to this phenomenon as a “Pretraumatic Stress Syndrome” as
it relates to the government’s color coded national alert system. Although
research following the attacks of September 11, 2001, has shown that rates of
psychopathology specific to 9/11 have generally returned to baseline after
spiking immediately after the attacks (Galea et al., 2003; Schuster et al.,
2001; Silver, Holman, McIntosh, Poulin, & Gil-Rivas, 2002), there is
preliminary research (Kramer, Brown, Spielman, Giosan, & Rothrock, 2004;
Sinclair & LoCicero, 2006) and polling evidence (Polling Report, 2005) to
suggest that people remain quite fearful of future terrorism. These fears
escalate substantially after large-scale attacks, such as following those in
Bali in 2002, Madrid in 2004, and London in 2005 (Polling Report, 2005). Terror
management theory (TMT) is useful for purposes of understanding how people
function under the threat of terrorism (Pyszczynski, Solomon, & Greenberg,
2003). Following attacks such as 9/11/2001, TMT would assume that mortality
salience, or the conscious realization that death is inevitable, becomes
omnipresent. As attacks continue across the world and as the general population
comes to focus more on these threats, mortality salience and fears of death
increase. Two variables have been shown to moderate these fears: (a) a sense of
connectedness to culture, or social connection, and (b) the belief that self is
an important and consequential contributor within culture, or self-efficacy.
Actively participating in a meaningful reality generates a sense of purpose,

The rationality of decision-making processes
occupies a central place in the literature on strategic decision-making
(Elbanna, 2006; Miller et al., 1996). Inconsistency among the results of
previous studies on strategic decision rationality, concerning for example, the
relationship between organization size and rational decision processes (cf.
Dean and Sharfman, 1993b; Fredrickson and Iaquinto, 1989; Kukalls, 1991;
Papadakis et al., 1998), indicates the need for further research to investigate
the role of the context in strategic decision rationality. Indeed, Pettigrew
(2003) argues that rationality in strategic decision processes cannot be
properly understood unless we understand its context. This view postulates that
the context in which strategic decision rationality takes place has a marked
impact. The term ‘context’ refers to the characteristics of decision-makers,
decision-speci?c characteristics, features of the external environment and
those of the ?rm itself. Any examination of strategic decision rationality that
fails to consider these contextual factors is likely to provide an incomplete
and perhaps inaccurate picture (Hough and White, 2003). Papadakis and Barwise
(1997a) pointed out the problem of identifying key in?uences on the SDMP. Hitt
and Tyler (1991) argued that an integration of the factors identi?ed by the
different perspectives on strategic decision making would contribute to a
better understanding of what in?uences the SDMP. They examined the SDMP to
determine which of three decision-making perspectives – the rational-normative
perspective, the external control perspective, and the strategic choice
perspective – received the greatest empirical support. Schwenk (1995)
recommended more empirical research of the kind exempli?ed by Hitt and Tyler’s
study in order to examine the predictive power of alternative perspectives.
Following Schwenk’s recommendation, Brouthers et al. (2000) examined two
perspectives concerning in?uences on the SDMP – environmental determinism and
strategic choice – to test which receives the greatest empirical support.
However, very few studies have adopted multiple perspectives and examined their
predictive power taking the others into account (Child et al., 2003).

Risk Taking and Performance Next we tested the link
between risk taking and decision making. Earlier research has found that the
risk-taking dimension is positively related to decision .innovation, and pro
activeness empirically. Few outside board members (Cowling, 2003; Schulze et
al., 2001), and weak pressure from external monitors demanding accountability
and transparency (Carney, 2005). At least partly as a result of this, it is
plausible to argue that ?rms make decisions, invest in projects, and pursue new
venture in a more informal, intuitive, and less calculated way. Put
differently, risk taking in ?rms might not be ?rmly grounded in systematic and
formal procedures and not have enough inclusion of outsiders’ perspectives and
opinions (Schulze et al., 2001, 2003). Therefore, risk taking in
entrepreneurial activities in family ?rms might be less understood and possible
outcomes more dif?cult to predict. If this explanations correct, it seems to
support recent arguments for ?rms to install l formal

Entrepreneurial Orientation, Risk Taking, and
investment decision making.

control and monitoring systems, such as active
boards, ?nancial controls, and strategic planning, in order to improve
performance, despite higher agency costs and risk of losing ?exibility (Schulze
et al., 2001, 2003). Better control, evaluation, and external monitoring can
support a more calculated risk taking that is guided toward projects that are
better evaluated and scrutinized and, thus, whose outcome is better understood.
However, this implies an important act of balancing, since the informality,
?exibility, and entrepreneurial orientation that characterize risk taking in
?rms can be harmed by increased formalization This seems to reveal an
interesting paradox of risk taking in 
?rms: increased formalization and external monitoring may lead to a risk
taking behavior that effect  
performance, but at the same time, this formalization and external
monitoring may sti?e the entrepreneurial activities that give rise to these
opportunities and risky projects to begin with. Unfortunately, our data do not
allow us a more detailed test of this possible explanation for risk taking and
fear of terrorism on decision making. We encourage future research to look
further into this.

Hypothesis:  fear of terrorism as affecting both risk
raking and investment decision making.

H1:  Fear of
terrorism has positive effect on risk taking.

H0: Fear of terrorism has no significant effect on
risk taking.





Fear Of Terrorism

Risk Taking

Investment Decision



















The purpose of this study was to develop a tool, the
TCS, to measure the psychological impact of fearing future terrorism and
illustrate how these fears have an impact on people’s lives and on
economy.  Many have also recently
recognized the lack of research specific to assessment and treatment following
terrorist attacks and have been calling for new screening and treatment
methodologies that are terrorism-specific, as opposed to the existing models,
which are extrapolated from disaster mental health (Bongar, 2006; Flynn, 2004;
Ruzek et al., 2006). The results of this study contribute to the literature in
several ways. First, to the best of our knowledge this is the first known study
to examine the effects of anticipatory or prospective fears related to
terrorism in the general population, as opposed to the bulk of the research
that has looked at retrospective psychological reactions to discrete terrorist
events. Second, it provides evidence that much of the general public is
adversely affected by the threat of future terrorism.  . Third, this study illustrates that some
people are likely to be more resilient than others in the face of this threat
and allows us to predict that resiliency is more likely for those who have
higher self-esteem and experience themselves as more socially connected. .
Fourth, this study would suggest that those who are affected by this threat and
who engage in catastrophic thinking related to terrorism are more likely to
report symptoms of anxiety, general stress, and depression. Likewise, it
illustrates that there is a relationship between terrorism catastrophizing and
risk taking, where people who catastrophize more are going to be more likely to
avoid flying, using public transportation, going into public places, voting,
socializing with others from different ethnic backgrounds, living or working in
cities or in skyscrapers, vacationing in certain places, and consuming media
coverage related to terrorism.

We had formulated research aims and objectives too broadly. We can specify
in which ways the formulation of research aims and objectives could be narrowed
so that the level of focus of the study could be increased.

Regardless of our choice of data collection method. Additional methods of
data collection could have increased the scope and depth of analyses and this
statement would be more authentic.Data collection method of focus group could
also be used in addition to questionnaire to get a fuller picture about the
level of effectiveness of fear of terrorism.

  We do not have an extensive experience in primary data collection
there is a great chance that the nature of implementation of data collection

Regardless of the choice of the research area. Because we
don’t have many years of experience of conducing researches and producing
academic papers of such a large size individually, the scope and depth of
discussions in our paper is compromised in many levels compared to the works of
experienced scholars.