No matter where a major terrorist attack occurs in the world, the feelings it elicits when one hears of it are universal - revulsion, shock, dread, and uncertainty. Uncertainty reigns supreme in the immediate aftermath of a terrorist attack, with regard to such things as who were the perpetrators, how did they go about planning a major attack undetected, and finally, was the terror act an isolated instance or the first of a series.

The terrorist attacks in Brussels on March 22, 2016, are the latest in a string of horrific assaults that seem to be occurring with greater frequency. A few months earlier, multiple attacks in Paris on November 13, 2015 had claimed 130 lives, making it the worst terrorist act in Europe in a decade. In the Brussels attacks, three bomb blasts - likely involving suicide bombers - at the airport and a subway station killed at least 31 people. The terror group ISIS or Islamic State, which had claimed responsibility for the carnage in Paris, has done so for the Brussels attacks as well.

In between these two strikes, there have been other terrorist atrocities in places as disparate as San Bernardino in the U.S., and Ankara and Istanbul in Turkey. This pattern of coordinated attacks on vulnerable public places seems to be the new template for terrorist activity. This is an extremely disturbing trend, as counter-terrorism experts acknowledge that it is next to impossible to provide security for every conceivable location where large numbers of people are present - transportation hubs like metro stations, stadiums, trains, hotels etc.

Not surprisingly, surveys in recent months show that fears of terrorist attacks in the United States are at the highest levels since 9/11. A New York Times / CBS News poll of 1,275 Americans in December 2015 revealed that 79 per cent of respondents believed a terrorist attack was somewhat likely or very likely in the next few months, with 7 out of 10 Americans identifying ISIS as a major threat to domestic security.

Financial markets have proved time and again that they are remarkably resilient to acts of terrorism, the latest instances being the muted reaction after the Paris and Brussels attacks. However, the long-term social damage may be more difficult to assess. Given that the attacks in Europe have occurred at a time when the continent is already struggling with its worst refugee crisis since World War II, they may serve to fan the flames of anti-foreigner sentiment and spur the rise of nationalist political parties, which may have dire consequences for regional and global geopolitics.

Firsthand Experience

My firsthand experience of terrorism occurred on March 12, 1993. At 1:30 pm on that Friday, a powerful car bomb exploded in the basement of the Bombay Stock Exchange, which was close to the bank where I was working as a currency trader. About 50 people were killed in the explosion and hundreds more were injured.

Feverish speculation about those responsible for the blast was cut short by news of another explosion 45 minutes later in a different part of the city. This was followed by unconfirmed reports of more explosions at regular intervals elsewhere in the teeming metropolis. Panicky workers who were rushing home could only hope that they would not meet the fate that had befallen the unfortunate commuters on a transit bus. It was blown to smithereens when a jeep bomb exploded in the Century Bazaar area of the city, killing more than 100. By the time the carnage ended about 2 hours after the first blast, more than 250 people had been killed in 13 different locations across Mumbai. The terrorist used car bombs and scooters packed with RDX explosives to blast targets like hotels, the Air India building, and busy marketplaces.

But Mumbai recovered. After the blasts, the city reopened for business as usual on Monday. While the string of attacks highlighted the vulnerabilities of cities and countries to terrorism, it had little impact on financial markets and the economy in India or elsewhere. But it was an entirely different story 8½ years later on September 11, 2001 in New York City. The biggest terrorist attack on the world's most powerful nation generated shock waves that reverberated around the globe for years and cost economies hundreds of billions of dollars.

Costs of Terrorism

According to International Monetary Fund (IMF) researchers Barry Johnston and Oana Nedelescu in their 2005 paper "The Impact of Terrorism on Financial Markets," acts of terrorism inflict direct and indirect economic costs. The direct economic costs are shorter-term in nature and include the destruction of life and property, responses from emergency services providers, restoration of systems and infrastructure, and the provision of temporary living assistance. The indirect costs of terrorism can be significantly larger as they affect the economy in the medium term by undermining consumer and investor confidence.

Terrorism can also have a long-term cost by reducing productivity because of increased security measures, higher insurance premiums, and the increased costs of financial and other counterterrorism regulations. To appreciate just one aspect of these incalculable costs, consider the billions of hours expended by millions of passengers in airport security lines over the years. The lost time is the price paid for rigorous security checks developed after the 9/11 attacks.

Economic Impact of 9/11

In their paper, Johnston and Nedelescu cite an Organisation for Economic Co-operation and Development (OECD) study that estimated the direct costs resulting from the 9/11 attacks at only $27.2 billion. However, other estimates of the economic impact of 9/11 place the total cost at orders of magnitude higher than the OECD estimate.

A decade after 9/11, the New York Times published a survey of estimates of the true economic costs of the attacks. The total cost of 9/11 was pegged at a staggering $3.3 trillion, comprising the following: