A new report measures potential threats to leading cities across the world – from tropical storms and floods to market crashes and cyber attacks.
The 279 cities in the Lloyd’s City Risk Index together generate 41% of global GDP – $35 trillion – while they risk losing $547 billion in economic output annually as a result of 22 threats which Lloyd’s has separated into five categories: finance, economics and trade; geopolitics and security; health and humanity; natural catastrophe and climate and technology and space.
The largest threats globally are: market crash ($103.3 billion), interstate conflict ($80.0 billion) and tropical windstorms ($62.6 billion).
Man-made threats account for 59% of the total, while climate-related risks account for $123 billion of lost GDP – a sum that will grow as extreme events increase in frequency and severity, the group said.
Three cities which stand to lose the most GDP through risk worldwide are Tokyo ($24.3 billion), New York ($14.8 billion) and Manila ($13.3 billion). The ten cities with the highest exposure could together lose $126.8 billion per annum, the report said.
Asian cities stand to lose the most GDP to risk, accounting for $241.28 billion or 44% of the global total, with tropical storms highlighted as being the costliest single risk for the region at $59.1 billion.
North American cities are at risk of losing $93 billion each year, and European cities, $70.3 billion.
In both regions, a market crash is highlighted as the single costliest risk factor. Cities in the Middle East and Africa could lose $97.2 billion of their GDP, with interstate conflict the costliest risk. Latin American cities make up less than 10% of the global total with $44.7 billion at stake.
Top 10 cities at risk
|#||City||Cost to GDP|
|2||New York||$14.8 billion|
|7||Los Angeles||$11.6 billion|
For South Africa, the report covers the major risks facing the country, with civil conflict at the top of the list at a cost of $580 million to GDP.
Sovereign default and a market crash are also other major potential costs to the country. Overall, major risks faced in the country’s major cities amounts to $2.34 billion (R30 billion), or 1.45% of GDP.
Top 10 risks for South Africa
|#||Risks||Cost to GDP||ZAR|
|1||Civil conflict||$580 million||R7.4 billion|
|2||Sovereign default||$440 million||R5.6 billion|
|3||Market crash||$420 million||R5.4 billion|
|4||Human pandemic||$380 million||R4.9 billion|
|5||Flood||$111 million||R1.4 billion|
|6||Drought||$110 million||R1.4 billion|
|7||Cyber attack||$110 million||R1.4 billion|
|8||Social unrest||$70 million||R897 million|
|9||Power outage||$40 million||R512 million|
|10||Terrorism||$20 million||R256 million|
Four local cities are featured on the list including Johannesburg, Cape Town, Pretoria and Durban. Joburg has global ranking of 143 out of 279 cities.
Although Johannesburg has a similar sized GDP to Lagos, it stands to lose only $1.07 billion of GDP output annually as opposed to Lagos’ $4.42 billion.
“Like many cities in this region, there are high levels of wealth disparity in Johannesburg that makes civil conflict the city’s costliest risk at $276 million.
“While there are programmes aimed at improving living and working conditions for low income residents of the city, around 20% of Johannesburg residents live in poverty,” the report noted.
It added that, increasingly, sovereign debt is becoming a threat to economic growth after Standard & Poor’s and Fitch downgraded South Africa’s sovereign credit rating to junk class in 2017.
“This has led to higher borrowing costs, which will impact on living costs and services in the country’s cities. It remains to be seen whether the new president, Cyril Ramaphosa, can restore faith in South Africa’s institutions, and restore investor and ratings agency confidence,” Lloyd’s said.
Cape Town, meanwhile, is threatened by drought, with its GDP risk figure put at $490 million, while Pretoria is at $410 million, and Durban at $370 million.
|#||City||Cost to GDP||ZAR|
|1||Johannesburg||$1 070 million||R13.8 billion|
|2||Cape Town||$490 million||R6.3 billion|
|3||Pretoria||$410 million||R5.3 billion|
|4||Durban||$370 million||R4.8 billion|
The table below shows the biggest risk factors for Johannesburg.