Somalia's protracted crisis of complete state collapse is unprecedented and has defied easy explanation. Disaggregating the Somali debacle into three distinct crises – collapse of central government, protracted armed conflict, and lawlessness – helps to produce more nuanced analysis. Significant changes have occurred in the nature and intensity of conflict and lawlessness in Somalia since the early 1990s, with conflicts becoming more localized and less bloody, and criminality more constrained by customary law and private security forces. These trends are linked to changing interests on the part of the political and economic elite, who now profit less from war and banditry and more from commerce and service business that require a predictable operating environment. The prolonged collapse of Somalia's central government cannot be explained as a reflection of local interests. The country's elite would profit greatly from the revival of a recognized but ineffective ‘paper’ state. The inability of Somalia's leaders to cobble together such a state is best explained as a product of risk aversion. Political and economic actors in collapsed states fear a change in the operating environment which, though far from ideal, is one in which they have learned to survive and profit.