The probability of, say, a nuclear terrorist attack might be tiny but the consequences, the “payoff” as it were, would be huge. It is expectation, not probability, that should determine policy towards terrorism."Expectation", here, means "probability times the payoff".
I don't get what the big deal is supposed to be. Of course you need to consider both the probability and the payoff of the evaluated events, but dying in the blast of a nuclear bomb isn't any worse than dying in your bathtub. The whole point of the bathtub drowning comparisons is that the payoff is just as great - you're dead one way or the other - but the precautionary measures taken in case of terrorism are vastly out of proportion to the probability differential between terrorism deaths and bathtub drownings.
What am I missing?