The Index highlights the potential impact on the economic output of 301 of the world’s major cities from 18 manmade and natural threats. Identifying the risks, modelling and measuring their impacts, and investing in greater resilience – from better infrastructure to increased insurance protection – are the first steps in this process.
The global impact of catastrophes
The balance of economic power is shifting from the developed economies of North America and Western Europe to the emerging economies of Asia, Latin America and Africa. More people are living in cities than at any point in history.
These factors have played a key role in driving global economic growth. But they have also concentrated wealth in vast urban centres, which makes economies – national and global – more exposed to the impacts of manmade and natural disasters.
Here are some interesting facts and figures from the Lloyd’s City Risk Index
- GDP of all 301 cities: US$372.56trn
- Total GDP at risk for all 301 cities: US$4.56trn
- Total GDP at risk shared by top 20 cities: 35.2%
- 10 threats account for 91% of the Total GDP ar risk for all 301 cities
- Total GDP at risk of emergining economies: 71.5%
Windhoek in context to this index
A quick assessment of these 18 threats eliminates Freeze, Nuclear Accident, Volcano, Terrorism and Tsunami risks from Windhoek. The threats and associated risk of Cyber Attack, Plant Epidemic, Sovereign Default and Terrorism offer less concern. Notable for Windhoek include Heatwave, Oil Price Shock, Solar Storm and Wind Storm.
Our assessment places the following 5 threats as those of most concern:
- Human Pandemic
- Market Crash
- Power Outage
It is possible to mitigate the impact of catastrophes, and their economic and social costs by investing in resilient institutions and robust infrastructure. This includes insurance:
- A 1% rise in insurance penetration translates into a 13% reduction in uninsured losses – a 22% reduction in taxpayers’ contribution following a disaster
- Insurance improves the sustainability of an economy and leads to greater rates of growth – a 1% rise in insurance penetration leads to increased investment equivalent to 2% of national GDP1
- Insurance de-risks governments, business and communities
- Insurance takes the financial burden of recovery off the taxpayer and boosts economic growth
- Insurance will continue to play a key role in enhancing risk mitigation and improving economic resilience to catastrophes.
It is clear that insurance covers are the primary tool in mitigating these risks and we need to analyse, quantify and then insure against these risks with a combined focus. You can review the complete Lloyd’s City Risk Index 2015-2025 HERE.
Let us know your thoughts on this index as well as the threats and risks associated to cities accross the globe and more specifically Windhoek in the comments below.