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Insuring against failure: the terrorist threat to Australia

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Melbourne’s deadly Bourke Street attack, closely followed by arrests aimed at foiling a separate plot, have reignited the terrorism debate.

Here, writing exclusively for, London-based RMS Catastrophist Dr Gordon Woo analyses the scale of the threat.

Australia, along with New Zealand, is part of the formidable Five Eyes Alliance with the intelligence forces of the UK, US and Canada.

With a massive annual budget of $US100 billion ($138 billion), this is the most effective and intrusive intelligence co-operative in the world, capable of smashing terrorist cells and interdicting complex terrorist plots.

The price of security is not just financial; there is also a cost in loss of privacy.

At a recent Five Eyes ministerial meeting on the Gold Coast, a statement was issued warning that privacy is not absolute, and tech companies must give law enforcement access to encrypted data.

Credible intelligence assessed by Australian security agencies indicates individuals or groups continue to possess the intent and capability to conduct a terrorist attack in Australia.

On a five-grade scale, the current threat level is three: probable. The higher grades are “expected” and “certain”.

By comparison, the UK threat level is one notch higher at grade four.

Everyone has their own social network. For terrorists, interaction with their social network is needed for motivation and gaining the tradecraft for terrorist operations.

However, the more communication there is between cell members, the greater the chance that counter-terrorism surveillance will close in. Too many terrorists spoil the plot.

As an example of the pitfalls of terrorist communication, a Pakistani and Middle Eastern terrorism cell with Islamic State links made contact with a British “amateur jihadi hunter” to discuss a possible Ramadan attack in Melbourne.

The plot, which was disclosed in June, was ambitious. It involved making a car bomb and driving it at a crowded corner of the Queen Victoria market, a prime city tourist landmark.

The jihadi hunter reported his communication to the Australian authorities, which notified Australian law enforcement.

“Lone wolves” have the best chance of evading the surveillance net and launching an attack. They can plan and execute their attack without communicating with anyone else.

One such lone wolf was the self-styled Muslim cleric who took 18 people hostage at the Lindt cafe in Sydney in December 2014.

Man Haron Monis killed the cafe manager before being himself killed; another hostage died from a ricocheting police bullet.

Since then a number of lone-wolf stabbings and shootings have taken place in Australia. But such acts of micro-terrorism are lost in the overall statistics of violent crime.

After a lone wolf, brothers have the smallest social network profile, with the maximum chance of evading surveillance.

Sydney brothers Khaled and Mahmoud Khayat allegedly planned to detonate an improvised explosive device on a flight to Abu-Dhabi.

This major plot was not reported through intelligence, but by an astute Etihad employee at Sydney airport who was curious about overweight luggage.

Apart from the plane attack, another alleged plan was to build a device that could unleash poisonous gas – hydrogen sulphide – in a confined, crowded public space. Police say they found precursor chemicals and some components of the device in Sydney.

The brothers are due to stand trial next year.

There are, and always will be, a number of marginalised Muslim Australians who are not well assimilated within Australian society and yet are unsatisfied with modern identity politics, which encourages promotion of their own Muslim identity.

This small minority of Muslim Australians are vulnerable to Islamist radicalisation.

Despite well-funded government counter-radicalisation initiatives, several hundred Australians travelled to Syria and Iraq to fight for Islamic State.

Furthermore, 1000 with links to terrorists are known to the Australian authorities.

For Australian insurers, terrorism cover is insurance against the failure of counter-terrorism.