"I'm not going to not take steps because of threats from any terrorist group. That isn't going to keep the world or New Zealand any safer. Actually, standing up to Isis and reducing their threat makes it safer."
He said New Zealand would make its own decisions but he did believe it would take a concerted international effort.
"My view is New Zealanders are prolific travellers and we have lots of people in that region. Experience shows us whenever there are high-profile terrorist attacks a New Zealander will be a casualty ... So should New Zealand play some part to stand up against Isis? I think on the balance of probabilities the answer to that is yes."
About 10 Defence Force personnel are in Iraq assessing what New Zealand could do and looking at possible bases. Baghdad is unlikely to be chosen.
Mr Key has previously said New Zealand was likely to offer help with training Iraqi forces alongside Australia but would not have a combat role.
He repeated that assurance.
He said he did not come under pressure from leaders at Davos to contribute and there was recognition New Zealand was limited in what it could offer given its size.