Over the years terrorism has taken hundreds of innocent lives. As the years go on, terror continues to dominate and affect the world’s population. The safety of residents is at stake, people scared in their own hometowns for a fear of attacks of all kinds such as car ramming, shootings, stabbings, bombings etc which have all been seen as terror attack strategies.
Let’s take a look back at 2016. Starting with the multiple attacks in Paris in November 2015 and moving on to the terrible Brussels airport bombing in March, then the Berlin truck ramming and the Orlando shooting. The terror continues into 2017 causing many casualties as a result of the Barcelona attack, Westminster attack, London bridge attack and the Ariana Grande concert in Manchester attack which left everyone horrified. The list of attacks is endless and seem to be occurring with greater frequency. 2019 is only a few months in and yet there is a list of terror attacks that have occurred, let’s not even get started with the attacks taking place in the Middle East.
The world is becoming immune and desensitised to terror as it becomes the norm in the morning papers headlining ‘Yesterday’s Terror Attack’, all until an attack takes place near you or affects people you know. Terror attacks do not only affect the people or the land but the financial markets too.
An article in 2005 was released, written by R. Barry Johnson and Oana M. Nedelescu on the impact of terrorism on the financial markets. As written in chapter 3: The financial markets have been directly and indirectly the victims of terrorist attacks. This sentence is directed mainly to the attack on the Twin Towers back in 2001 after statistical data was carried out just under a decade later, calculating that the costs of the attack stood at an estimated 3.3 trillion dollars.
However, since the attack in 2001, markets show only another 4 times where they were affected by the terror that struck. These 4 times were in 2004, the Madrid attack, 2005, the London attack, 2008, the Mumbai attack, and 2011, the Washington attack.
It may seem strange that terror attacks don’t always affect the markets so strongly. How does something so big and destructive not have such a big impact on the markets?
This may be due to the fact that the markets relate to a more physical stand, whereas these acts of terror are based on religious beliefs and acts of irrational hate crime. In addition, the markets are aware that the impact of terrorist attacks are temporary and therefore may not respond to them. In contrast to natural disasters, wars and politics which will perhaps have a long-lasting effect on the economy and society.
Every act of terror creates a different degree of fear and financial uncertainty. There are some attacks which only influence specific markets when others can have a stronger impact throughout the entire financial system.
All we can hope for is that this hatred and distance between people simply because of differences and unfamiliarity will one day come to an end and the world will become a better, more peaceful place.