Llyod's City Risk Index 2015-2025 was released on 3 September 2015. The Index is the first of its kind as it quantified the expected loss to cities’ Gross Domestic Product (GDP) from various natural and manmade threats.
While Taipei topped the Index with 181 billion US dollars, Mumbai is expected to face maximum risk in India with 47 billion US dollars potential loss.
About the Index
• It quantified the losses by using the GDP@Risk methodology that took into account 301 major cities across the globe and 18 major threats for the 2015-2025.
• The threats were divided into three categories viz., Natural (cyclones & earthquakes), Manmade (Market crash & nuclear accident) and Emerging (Cyber attack & Plant epidemic).
• It was produced for Lloyd’s by the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School.
Highlights of the Index
• The selected 301 countries together are expected to see a loss of 4.56 trillion US dollars out of 372.56 trillion US dollars of total GDP during 2015-25 from 18 threats together.
• The share of emerging cities (cities outside G8) in the total loss is projected at around 72 percent.
• Nearly half of the Total GDP@Risk is linked to manmade threats, including Market crash, Cyber attack, Power outage and Nuclear accident.
• Taipei, Tokyo, Seoul, New York, Hong Kong, Shanghai and London, have significant levels of economic exposure to catastrophic events.
• Top 5 threats are: market crash, human pandemic, windstorm, earthquake and flood in the decreasing order of their threat potential.
• 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.
• Combined exposure to Market crash, Oil price shock and Cyber attack represents more than 60 percent of the Total GDP@Risk in both New York and Paris.
Index with respect to India
• Ten cities viz., Mumbai, Delhi, Kolkata, Chennai, Hyderabad, Bengaluru, Surat, Kanpur, Pune and Ahmedabad were selected for the survey.
• Mumbai will face maximum risk with 47 billion US dollars as human pandemic and terrorism will become its top threats.
• Delhi will be facing next highest threats with 44 billion US dollars total loss during 2015-2025.
In order to mitigate the potential risks the survey advocates insurance as the major solution. As per the study 1 percent rise in insurance penetration translates into a 13 percent reduction in uninsured losses – and 22 percent reduction in taxpayers’ contribution following a disaster.
Flood, human pandemic, oil shocks, cyber attacks, market crash will be the major threats to the Indian cities.
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When: 3 September 2015