Cities faced with $320bn cost each year from man-made risks
Man-made risks such as cyber-crime, interstate conflicts or market crashes put an estimated $320.1 billion of global GDP ad risk on average each year, according to Lloyd's City Risk Index.
Built in collaboration with Cambridge University, the index reveals that 279 cities accros the world risk losing an average of $546.5 billion in economic output annually from 22 different threats. This is comprised of $320.1bn to man-made risks and $226.4bn to natural catastrophes.
The biggest man-made threat to the global economy would be a financial market crash, putting on average $103.3bn in global economic output at risk per year.
Interstate conflict was the second costliest, totalling $80bn of GDP at risk.
Natural disasters and climate-related risk together still account for $123 billion of GDP at risk. The costliest climate events are windstorms which account for $66.3bn of GDP at risk and flood that puts a further $42.9bn of economic output at risk.
The majority of risk is concentrated in the 10 cities with the highest GDP at risk, which face $126.8bn in potential losses to economic output each year.
“No city will ever be completely risk free," said Lloyd's chairman Bruce Carnegie-Brown. "Disruptions will always occur, whether it is the result of a hurricane or a cyber-attack. We have created this unique index to help cities around the world identify, understand and quantify their exposure to risk, which will help them prioritise investments and build resilience."
He continued: “The index shows that investing in resilience – from physical flood defences to digital firewalls and enhanced cyber security, combined with insurance – will help significantly reduce the impact of extreme events on cities, improve economic stability and enhance prosperity for all. I urge insurers, governments and businesses to look at the index, and work together to reduce these exposures by building more resilient infrastructure and institutions.”
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