The 20 cities most at risk of economic disaster

Louis Dor
Tuesday 08 September 2015 21:00
news

A new report has ranked the world cities with the most to lose from various disasters.

The study, from Lloyds Of London, used "catastronomic" techniques to measure the economic impact of threats including natural disasters, financial crashes and pandemics, in order to gauge how individual GDPs of cities would be affected by certain scenarios.

Adding together all the expected losses from the different threats and subsequent scenarios between the years 2015 and 2025, the total GDP at risk for a given city was calculated.

London was 17th in the index, with a total GDP at risk calculated to be at £34.76bn.

Taipei came highest in the index, with £117.89bn deemed to be at risk, followed by Tokyo (£99.73bn) and Seoul (£67.34bn).

The Lloyd’s City Risk Index encompassed 301 cities, which were selected based on their economic, business and political importance. Combined they are responsible for over half of global GDP.

These cities were then indexed by the likelihood of 18 types of global threats and the magnitude of the subsequent effects.

The greatest risk was found to be a market crash, which would cause $1.05 trillion to be in danger in these cities.

Professor Daniel Ralph, academic director of the University of Cambridge Centre for Risk Studies, said:

A framework to quantify the average damage caused by a Pandora’s box of all ills – a ‘universal’ set of catastrophes – can be used to calibrate the value of investing in resilience.

This is what the GDP @Risk metric for 300 World Cities attempts to provide. We believe that it is possible to estimate the cost to a business, city, region or the global economy, from all catastrophic shocks. Such holistic approaches are an antidote to risk management that reacts to threats taken from yesterday’s news headlines.

Our simple methodology suggests that between 10 per cent and 25 per cent of GDP @Risk could be recovered, in principle, by improving resilience of all cities.

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