Human-Caused Disasters Are also a Threat

Risk reduction should focus on increasing resilience and insurance.

by Eric Holdeman / June 17, 2018

Cities will continue to grow in size, influencing the level of risk as we concentrate more people and assets in major cities of the world. See this article, Man-made risks forecast to cost world’s cities $320bn each year on average.

"Man-made risks like cyber-crime, interstate conflicts or market crashes are a bigger threat to economic output than natural disasters such as hurricanes, floods, earthquakes and volcanoes, putting an estimated $320.1 billion of global GDP at risk on average each year," according to Lloyd’s, the world’s specialist insurance and reinsurance market.

The Lloyd’s City Risk Index, built in collaboration with Cambridge University, is a unique study measuring the impact of 22 threats on 279 cities' projected economic output. The index reveals that 279 cities across the world — the key engines of global economic growth with a combined 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."

Note that at the link they don't discount the impacts of climate change on the cost of disasters. They also highlight how regional conflicts (wars) can also have a major impact on the cost of damages to infrastructure and economies. 

I have to also note that this is Lloyd's of London and they are in the "insurance business." However, I do believe one of the major risk reduction strategies anyone can have, from individuals to businesses is to have insurance coverage for a wide variety of risks and hazards.  For instance, the only insurance I personally don't have is flood insurance. Sitting way up on a hill, it will have to be a flood of biblical proportion that even Noah would take note of to impact our home. The last insurance coverage I added for only a few dollars a year was sewer back-up insurance. I have a former co-worker who had a "significant" event and it made me think about my peace of mind — for a few dollars more. 

The Recovery Diva shared the link above.