Lloyd’s City Risk Index
2015-2025

The global impact of catastrophes

The balance of economic power is shifting from the developed economies of North America and Western Europe to the emerging economies of Asia, Latin America and Africa.

Yet the world has never been more interconnected. Globalisation, driven by rapid improvements in information technology, has linked us all in ways previously unimaginable.

More people are living in cities than at any point in history. These factors have played a key role in driving global economic growth.

But they have also concentrated wealth in vast urban centres, which makes economies – national and global – more exposed to the impacts of manmade and natural disasters.

Recent examples include: the sub-prime mortgage crisis; Hurricane Katrina, US; the Tohoku earthquake and tsunami, Japan.

Lloyd’s City Risk Index 2015-2025 quantifies this exposure by calculating the potential GDP@Risk in 301 cities from both manmade and natural threats.

The Index by numbers

• GDP 2015-2025:
  All cities
  

  US$372.56trn

• Total GDP@Risk:
  All cities
  

  US$4.56trn

• Total GDP@Risk:
  Share among emerging cities

  71.47%

• Total GDP@Risk:
  Share among Top 20 cities

  35.20%

Facts and figures

The extraordinary effect of the few:
Just 10 threats account for 91% of the Total GDP@Risk.

Humans harm themselves:
Nearly half of the Total GDP@Risk is linked to Manmade threats, including Market crash, Cyber attack, Power outage and Nuclear accident.

Cities with high asset values are the most financially exposed in absolute terms:
Taipei, Tokyo, Seoul, New York, Hong Kong, Shanghai and London, have significant levels of economic exposure to catastrophic events.

The true cost of globalisation:
In an increasingly interconnected and technologically dependent world, four Emerging threats – Cyber attack, Human pandemic, Plant epidemic and Solar storm – account for more than one fifth of the Total GDP@Risk.

Market crash puts the most GDP@Risk globally:
It represents nearly a quarter of all cities’ potential losses.

Emerging economies have the most to lose:
Lloyd’s City Risk Index 2015-2025 shows that, collectively, 71.47% of the Total GDP@Risk is carried by cities in emerging economies.

Exposure to a single natural catastrophe often accounts for high levels of GDP@Risk in cities in emerging economies:
Earthquake risk alone represents more than 50% of the Total GDP@Risk in both Lima and Tehran.

GDP in developed cities is most at risk from multiple and often Manmade threats:
Combined exposure to Market crash, Oil price shock and Cyber attack represents more than 60% of the Total GDP@Risk in both New York and Paris.

Insurance solutions

It is possible to mitigate the impact of catastrophes, and their economic and social costs by investing in resilient institutions and robust infrastructure. This includes insurance:

• A 1% rise in insurance penetration translates into a 13% reduction in uninsured losses – a 22% reduction in taxpayers’ contribution following a disaster¹
• Insurance improves the sustainability of an economy and leads to greater rates of growth – a 1% rise in insurance penetration leads to increased investment equivalent to 2% of national GDP¹
• Insurance de-risks governments, business and communities
• Insurance takes the financial burden of recovery off the taxpayer and boosts economic growth
• Insurance will continue to play a key role in enhancing risk mitigation and improving economic resilience to catastrophes.

Insurance plays a key role in enhancing risk mitigation and improving economic resilience to catastrophes.

Understand the risks: view the potential economic impact of 18 threats on 301 cities.