Mark Cooper, General Representative Middle East, Lloyd's Limited provides an update about Lloyd's latest City Risk Index
Dear all, I would like to bring to your attention that Lloyd’s have recently released their new City Risk Index which you can find and use online at https://cityriskindex.lloyds.com/ The Lloyd’s City Risk Index, built in collaboration with Cambridge University, is a unique study showing how much economic output 279 cities would lose annually (GDP@Risk) from 22 man-made and natural threats. The index reveals that these 279 cities across the world – the key engines of global economic growth with a combined gross domestic product (GDP) of $35.4 trillion – risk losing on average $546.5bn in economic output annually (GDP@Risk) from all 22 threats. This comprises $320.1bn to man-made risks and $226.4bn to natural catastrophes.
Lloyd’s Chairman, Bruce Carnegie-Brown, said:
“No city will ever be completely risk free. 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. “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.”
Quick facts about the City Risk Index: • The 22 risks measured by the index are: Man-made: power outage, nuclear accident, commodity price shock, social unrest, civil conflict, cyber-attack, terrorism, interstate conflict, sovereign default, market crash. Natural: heatwave, solar storm, freeze, tropical windstorm, temperate windstorm, drought, flood, earthquake, tsunami, volcano, plant epidemic, human pandemic. • The first Lloyd’s City Risk Index was launched in 2015. For 2018, the methodology has been updated which means it is not possible to meaningfully compare data between the two indices. The 2018 index includes three new risks: interstate conflict, civil conflict and social unrest to reflect the threat these pose to economies around the world. Windstorm is split into temperate and tropical storms. Oil price shock becomes commodity price shock. • The index shows how much economic output (GDP) a city would lose on average annually as a consequence of various types of rare risk events that might only take place once every few years, such as an earthquake, or from more frequently occurring events such as cyber-attacks. • GDP@Risk is an average annual loss estimate – in other words it is a projection based on the likelihood of the loss of economic output from the threat. The resilience levels of each city are taken into account, including the city’s governance, social coherence, access to capital and the state of its infrastructure. If a city is very resilient it can expect to have lower losses. • Using the GDP@Risk figure, the index gives an estimate of the average annual loss to the economy of each city, from each risk. Extreme risks are very rare and therefore the index averages out these large losses to produce an annual average loss estimate. This average annual loss is equivalent to the amount that a city would need to put aside each year to replace these losses to their economy in the long run. Additionally, when a major catastrophe occurs, the economic disruption normally lasts for several years. For this reason, the index counts all the multi-year losses into the average annual loss estimate.
To find out more on the Lloyd’s City Risk Index please follow the web link as above, or feel free to ask any queries you may have. Lloyd’s Dubai will be hosting a presentation after the summer to discuss the City Risk Index in further detail – currently scheduled for Monday 24th September, 9-11am so do please mark your calendars. A formal invite for this will follow nearer to the date. We are also working with the wider business community on how we can further develop this work and across the Middle East.
To regsiter your interest to attend this event and for more information, please contact Jessica.Stokes@lloyds.com
Best, Mark Mark Cooper BBG Dubai Member and General Representative Middle East, Lloyd’s of London, Dubai, United Arab Emirates