Partitioning the Expected Value of Countermeasures with an Application to Terrorism

Abstract

Benefit–cost analyses are critical to support U.S. agencies’ programmatic decision making. These analyses are particularly challenging when one of the benefits is adversary deterrence. This paper presents a framework for calculating the value of deterrence related to countermeasures implemented to mitigate an attack by an adaptive adversary. We offer an approach for partitioning the benefit of countermeasures into three components: (1) threat reduction (deterrence), (2) vulnerability reduction, and (3) consequence mitigation. The benefit of a countermeasure is measured by the expected value of countermeasure implementation (EVCI) attributable to a specific countermeasure. It is based on the concept of expected value of imperfect control, defined as the difference in the expected values of alternatives with and without countermeasures. The EVCI represents all the benefits of implementing the countermeasure and is derived from three sources: (1) changes in attack probability (threat reduction from deterrence), (2) changes in detection probability (vulnerability reduction), and (3) changes in the distribution of attack outcomes (consequence mitigation). We partition the EVCI and estimate the portion attributable to each of these three sources to quantify the unique benefit of each. We provide two applications of the partitioning methodology using examples from the published literature that examine countermeasures designed to protect commercial aircraft against man-portable air defense systems. The proposed framework provides an approach for explicitly accounting separately for deterrence, vulnerability reduction, and consequence mitigation in benefit–cost analyses. It provides quantifiable insights into how countermeasures reduce terrorism risk. Funding: This material is based upon work supported by the U.S. Department of Homeland Security under [Grant Award 22STESE00001-02-00]. The views and conclusions contained in this document are those of the authors and should not be interpreted as necessarily representing the official policies, either expressed or implied, of the U.S. Department of Homeland Security. This award was made to Northeastern University and the University of Southern California is a sub-awardee. This work was also supported by the National Science Foundation [Grant 2027296] awarded to Decision Research.