GDP at risk from geopolitical and security threats in leading cities up 16%

Annual GDP under threat from geopolitical and security risks to the world’s largest cities rose by 16% in the past year, according to research by the Centre for Risk Studies at the Cambridge Judge Business School. Its 2018 Global Risk Index, upon which the Lloyd’s City Risk Index published this week is based, the centre finds that interstate conflict, which belongs to the geopolitical and security class of threats, is the only risk studied to have systemically increased since the research was carried out last year. “This increase reflects combined high levels of political turbulence in developed economies – challenging the contract between civil society and states, and evidenced by a rise in populism – and risks to global trade and global security,” said the Centre for Risk Studies. The estimated potential impact of geopolitics and security has risen “significantly” since 2015 when the centre first compiled its risk index, it explained. The Global Risk Index compiles the impact of 22 types of threats across 279 cities into a single, annual measurement of economic loss. The amount of GDP at risk each year reflects a city’s economic output and exposure to threats associated with its geography and type of economy, offset by its resilience and ability to recover. This year’s analysis shows a 6.5% increase in annual GDP at risk since 2017 in all cities studied. Economic growth accounts for slightly more than half the increase, while the balance results from changes in risk levels. By size of potential impact, the top three classes of threats in the 2018 index are natural catastrophes with $165bn at risk, financial economics and trade with $142bn at risk, and geopolitics and security with £133bn. Risk Centre academic director professor Danny Ralph said: “Shocks to the global economy are largely inevitable, resulting in real losses to the economy. The Global Risk Index demonstrates the value of investing in resilience. An economy’s ability to recover from a catastrophe is demonstrated by the speed and extent to which it reconstructs factories and homes, repairs damaged infrastructure, regains consumer and market confidence, and re-engages in business activities after an event.” The Lloyd’s City Risk Index, released this week and based on the Global Risk Index, found that an estimated $546.5bn of GDP is at risk each year across leading cities, with man-made threats posing greater vulnerability than natural catastrophes. It shows that Tokyo, New York and Manila have the highest exposure, and that boosting resilience would reduce annual GDP at risk in the 279 cities studied by £73bn. London, Moscow and Paris are the most exposed European cities, with a combined $24.6bn of annual GDP – or a third of Europe’s total losses – under threat, according to the new research. The Lloyd’s City Risk Index finds that market crash, cybercrime and floods are the top risks facing European cities. European cities account for only 13% of global GDP at risk, in part due to their relatively strong resilience.

GDP at risk from geopolitical and security threats in leading cities up 16%

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Want to read this article?

Read Next

Ferma members told AI will bring risk and reward for corporate insurance buyers

Aon’s revenues up 5% as it completes $13bn NFP deal

Warmer climate spreading risk of malaria and dengue to new regions

UN launches new net-zero insurance forum to replace NZIA

Pen extends fleet capacity deal with Zurich in Republic of Ireland

Related Articles