By all accounts, Bermuda has not been immediately affected by the launch of the attack on Iraq by the US and its allies.

Airlines have not yet seen any widespread cancellations of flights to the Island and there has not been any dislocation of imports to the Island.

Nor has there been much sign of increased security against possible terrorists acts.

That is not surprising, given that this war is still in its very early stages.

But that is no reason for complacency. The growing interdependence of the global economy and the heightened risk from terrorism means that things can change very fast and nowhere, nit even Bermuda, is immune.

That means the Island should be preparing for possible problems, even while it hopes that it will not be affected.

The main concern is the effect that the war may have if it turns out to be more protracted than many pundits are predicting.

If that is the case, it may well lead to a slowdown in the US economy that will in turn affect all its neighbours. That could have serious ramifications for tourism and to a lesser extent, international business.

Some would argue that tourism might benefit if Americans - facing unprecedented hostility and travel risk in Europe and elsewhere - choose to vacation closer to home. Then too, the weakening US dollar makes foreign travel less attractive as well, while Bermuda's pegged currency may become more competitive.

However, those attractions would be worth little if any terrorist acts made the very act of flying or travel unattractive. The airline industry has not recovered from the double shocks of September 11 and the economic downturn and it will take very little to deter travellers from flying or taking a cruise.

The cruise industry is already seeing reductions in bookings and that is exacerbated by over capacity as a result of the extraordinary amount of new building that took place in the last five years. While Bermuda's cruise industry is more stable than the Caribbean's, financial weakness in the cruise lines will have to be watched very closely.

On the international company side, things are rosier, at least in the short term. Insurers and reinsurers may reap some gains as companies scramble for war and terrorism coverage, thus driving up rates. If the war is indeed short, they will benefit. The effect of a long war is much harder to gauge, especially if claims start to come in.

The economy is only one part of the equation. It would be easy to dismiss the significance of Bermuda in a conflict like this, but there is a need for heightened watchfulness against potential terrorists here as well.

The human cost of war should not be forgotten either. There are Bermudians and non-Bermudians here with children and loved ones serving in the war or likely to be called up.

The strain and the tension of a major conflict, will play heavily on their nerves, and to a lesser extent on the whole community's. It is important for people to go on with their normal lives even as great events are unfolding.