The Wharton School’s Howard Kunreuther spent four decades studying ways to manage the risks of floods, hurricanes, earthquakes, chemical accidents, and other natural and technological disasters. Then came 9/11, “the ultimate low-probability event.”

Ever since he joined the Wharton faculty in 1972, Dr. Howard Kunreuther, the Cecilia Yen Koo Professor of Decision Science and Public Policy and co-director of the Center for Risk Management and Decision Processes, has been biking to work from his home on Philadelphia’s Main Line. But on the morning of September 11, 2001, Kunreuther was following a different route, riding up the Hudson River bike path on the west side of Manhattan on his way to Columbia University—where, as it happened, he was working on a study of catastrophic risk.

Hearing on the radio at 8:48 a.m. that a “small plane” had hit the World Trade Center, he stopped at the 69th Street pier, where he could see one of the towers in flames. He left the pier at 9:01, a minute before the second plane hit the other tower, and only learned of the second plane, and of the disaster in general, at about 10 a.m. when he took a call from his wife Gail, who told him what had happened. The event became a turning point in Kunreuther’s career, a catastrophe that dwarfed all previous events—floods, earthquakes, hurricanes, chemical accidents, and other disasters—for which he had developed his risk theories. “The ultimate low-probability event,” he calls it.

Terrorist events differ from natural disasters in many ways, but they share one characteristic with them—having happened once, they are likely to happen again. For the past several years, Kunreuther and his colleagues at the Wharton Risk Center have been examining the thorny issue of how to protect society from the economic effects of such an attack. Since early 2003, the center has hosted three one-day roundtable discussions in an effort to provoke thinking in industry, government, and academe about how to ensure social and economic continuity after another major terrorist event.

This past February, at the latest meeting in the series, Kunreuther held court in a Huntsman Hall lecture room before an audience of some of the top minds in the insurance industry. With an urgency that befit his subject, he crisply framed the topic, introduced the speakers, and invited participants to consider the big questions: Can the insurance industry alone provide meaningful coverage against the next terrorist attack? What role, if any, should government play? What’s the best way of motivating business and industry to protect themselves from an attack on the scale of 9/11?

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©2005 The Pennsylvania Gazette
Last modified 07/02/05

Insuring Against Terror
By Jon Hurdle

Photography by Jacques-Jean Tiziou

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