Interdependency analysis in the context of this article is a process of assessing and managing risks inherent in a system of interconnected entities (e.g., infrastructures or industry sectors). Invoking the principles of input-output (I-O) and decomposition analysis, the article offers a framework for describing how terrorism-induced perturbations can propagate due to interconnectedness. Data published by the Bureau of Economic Analysis Division of the U.S. Department of Commerce is utilized to present applications to serve as test beds for the proposed framework. Specifically, a case study estimating the economic impact of airline demand perturbations to national-level U.S. sectors is made possible using I-O matrices. A ranking of the affected sectors according to their vulnerability to perturbations originating from a primary sector (e.g., air transportation) can serve as important input to risk management. For example, limited resources can be prioritized for the "top-n" sectors that are perceived to suffer the greatest economic losses due to terrorism. In addition, regional decomposition via location quotients enables the analysis of local-level terrorism events. The Regional I-O Multiplier System II (RIMS II) Division of the U.S. Department of Commerce is the agency responsible for releasing the regional multipliers for various geographical resolutions (economic areas, states, and counties). A regional-level case study demonstrates a process of estimating the economic impact of transportation-related scenarios on industry sectors within Economic Area 010 (the New York metropolitan region and vicinities).

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The 2003 Northeast Blackout revealed vulnerabilities within the US electric powergrid system. With the economy so dependent on electric power for most aspects of life, a powergrid failure can have far-reaching higher-order effects and can impair the operability of other critical infrastructures. An inoperability of the power sector can result from different types of disasters (e.g., accidents, natural catastrophe, or willful attacks). This paper demonstrates the Inoperability Input-Output Model (IIM) to measure the financial and inoperability effects of the Northeast Blackout. The case study uses information from sources such as the US input -output tables and sector-specific reports to quantify losses for specific inoperability levels. The IIM estimated losses of the same magnitude as other published reports; however, with a detailed accounting of all affected economic sectors. Finally, a risk management framework is proposed to extend the IIM's capability for evaluating investment options in terms of their implementation costs and loss-reduction potentials.