Government policies and programs have been developed over many decades in the United States to address risks to private businesses and individuals associated with a wide range of disasters and adverse events. Programs such as riot insurance, unemployment insurance, and workers' compensation have been created to cushion the effects of urban riots, job loss, and workplace injuries. Programs have been developed at the federal and state levels to share risks and provide compensation for losses due to large natural disasters such as earthquakes, floods, and hurricanes. Another risk to citizens and businesses in the United States became more evident on September 11, 2001: the risk of terrorism. Stakeholders and the policy community have been proposing and discussing government programs and policies for addressing this new risk, although the need for a public role is still being debated. This chapter explores the public role in addressing terrorism risk, and specifically the role of terrorism insurance and compensation in national security.

Much of the recent debate on terrorism risk management has focused on insurance and the Terrorism Risk Insurance Act of 2002 (TRIA). Insurance is just one tool for addressing risk, however, and we begin this chapter with a brief description of the broader set of mechanisms that have been used in the United States to provide risk management and compensation for adverse events.