I believe it's the kevlor shroud that is suppose to contain the engine parts from penetrating the fuselage during a catastrasphic engine failure. It looks like it worked.
It's just around the fan blade... Almost all engines have them gaurding the N1 blades from becoming giant throwing stars. The really isn't anything to keep the compressor discs and turbines out of the cabin. Thats what got UAL in Iowa, and that Delta MD-80 in PNS. (I think it was PNS)