Pathways to City Resilience

On February 17, Lloyd’s and American Security Project, a nonpartisan national security think-tank, hosted “Pathways to City Resilience”.

This half-day event examined the challenge of developing global resilience and protecting urban centres from economic shocks. The forum saw key policymakers, business leaders, risk managers and regulators discuss how U.S. cities and institutions can build greater resilience and examine best practices in risk assessment, mitigation, adaptation and transfer.

Pathwys to city resilience


Speaking at the event, Glenn Dorr, Lloyd’s Northeast Regional Director, said:
The City Risk Index is designed to stimulate the conversation between business, government and insurers on our collective responsibility to ensure that appropriate steps are taken to promote awareness of risk, facilitate post-event recovery and build resilience. We have to work out how we can support each other to protect our collective interests and those of the citizens in our ever growing cities across the United States.”

Dante Disparte, Founder and CEO of Risk Cooperative, said:
"The confluence of man-made, natural and emerging risks set against a backdrop of unprecedented levels of urbanization call for entirely new combinations of public sector, insurance and capital market support. Risk is a cost of doing business, leading a city or a country in an interconnected and turbulent world. Resilience on the other hand is an investment, one requiring a long term investment horizon and new categories of solutions. The Lloyd's City Risk Index begins to frame the economic consequences and opportunities shaping our times and urges policymakers and business leaders alike to get off the sidelines."

The event focused on the challenges facing a city like Washington D.C., a major urban metropolis and the centre of vital political and legal institutions. The discussion looked at the potential natural and man-made threats to the city, using research from Lloyd’s City Risk Index, the first ever analysis of the potential impact of 18 catastrophic threats on the GDP of 301 major cities around the world. The Index uses an innovative metric, GDP@Risk, to quantify the potential losses from one or more threats to a location’s projected ten-year economic output.

Lloyd’s City Risk Index 2015-2025 found that potential losses from manmade and natural threats for 35 major cities in North America over the next decade could total $616.95bn. According to the Index, the greatest threat for cities in the US and Canada is a market crash ($170.32bn), followed by oil price shock ($96.24bn), cyber attack ($93.33bn), flood ($76.82bn), and human pandemic ($56.51bn). Looking specifically at Washington DC, the analysis predicts that the city will produce an average annual GDP of roughly $350bn over the next decade. Roughly $26bn of that GDP is potentially at risk, with financial market crash, oil price shock, cyber-attack and human pandemic responsible for creating the most potential damage.

It also identifies three important emerging trends in the global risk landscape:

  1. Emerging economies will shoulder two-thirds of risk related financial losses as a result of their accelerating economic growth, with their cities often highly exposed to single natural catastrophes.
  2. Manmade risks such as market crash, power outages and nuclear accidents are becoming increasingly significant, associated with almost half the total GDP@Risk. A market crash is the greatest economic vulnerability – representing nearly a quarter of all cities’ potential losses.
  3. New or emerging risks, such as cyber-attack, are also increasingly significant. Together, they account for more than a third of the total GDP@Risk with just four – cyber-attack, human pandemic, plant epidemic and solar storm – representing more than a fifth of the total GDP@Risk.

The findings also show the need for governments and businesses to work together to build more resilient infrastructure and institutions. How quickly a city recovers after a catastrophe is a key component of the total risk, and the impact of events is mitigated by rapid access to capital to help restore the economy.

You can find out more information about Lloyd’s City Risk Index at www.lloyds.com/cityriskindex

Watch videos from the event:

Judge Alice Hill, Featured Speaker
Risk & Resiliency: Understanding the City Risk Index
Gov. Tom Ridge, Featured Speaker
Emerging Risks: Impacts and Opportunities
The Way Forward: How to Build Resiliency

For further information please contact: alex.dziedzan@lloyds.com

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