Threats from Conflict and Terrorism account for more than half of Indian cities’ Risks:Lloyd's Report

• Indian cities in top 10 globally for civil conflict and terrorism risks • Delhi, at US$3.5bn, is the highest ranked city in South Asia for economic output at risk • Flood and tropical windstorm threats account for 12% of India’s risk landscape • Indian cities among the least resilient in the world

Shankar Garigiparthy,Country Manager,Lloyd’s India

 

MUMBAI:

The latest edition of Lloyd’s City Risk Index (CRI) has found out that Delhi (5th), Mumbai (6th) and Bangalore (7th) rank among the top 10 cities globally for GDP@Risk for terrorism threats.

 

Delhi (5th) and Mumbai (7th) are also in the global top 10 for GDP@Risk attributed to civil conflict.Delhi has the largest GDP@Risk of all Indian cities at US$3.5bn and is also the highest-ranked city in South Asia. It is closely followed by Mumbai at US$3.1bn.

 

Civil conflict and interstate conflict are the top two threats for each city, except Kolkata which has tropical windstorm as its largest threat.

 

Threats from conflict and terrorism account for more than half (58 pc ) of the risk to India’s economic output annually (GDP@Risk), at US$9bn, according to Lloyd’s, the world’s insurance and reinsurance market.

 

The latest edition of Lloyd’s City Risk Index (CRI), reflecting the geopolitical tension in the region,developed in collaboration with the Cambridge Centre for Risk Studies, was released on Wednesday and measures impacts from 22 separate threats in 279 cities across the world.

 

These cities were chosen as they are the key engines of global economic growth,with an estimated combined economic output of US$35.4 trillion (equivalent to 41% of global GDP).

 

The report has analysed the impacts of various prominent risks like terrorism, civil conflict, human pandemics floods and climate change, on gross domestic product(GDP@Risk) of 10 major cities in India: Ahmedabad, Bangalore,Chennai, Delhi, Hyderabad,Kanpur, Kolkata,Mumbai,Pune,and Surat.


Other threats which feature prominently for India’s cities include human pandemics and floods,posting an estimated US$1.7bn and US$1.3bn GDP@Risk for the country respectively.

 

Lloyd’s India Country Manager, Shankar Garigiparthy, said:“While India is fast becoming one of the most diverse and largest growth economies in the world,there is some concern that this may be undermined somewhat by a rising spate of conflict in the region.India faces complicated and costly threats from subversive groups as well as from the complex relationship with its neighbours. We hope that our research helps Indian cities on their first step to building resilience and managing these risks.”

 

Worst-case scenarios:

While the CRI calculates GDP@Risk on an average annual basis, it also assesses the estimated cost to each city’s GDP if a particular threat scenario occurred. For Delhi, this reveals that an extreme interstate conflict scenario could cost the city US$225.2bn and that an extreme flood or civil conflict could cost US$122bn or US$72.3bn respectively.

 

With Delhi’s overall GDP at US$108.5bn, an extreme interstate conflict or flood could cost more than the city’s overall annual economic output.

 

Extreme interstate conflict is also the costliest threat scenario for Ahmedabad and Mumbai, while an extreme civil conflict scenario would be costlier for Bangalore, Chennai, Hyderabad and Kanpur. For Kolkata, the costliest extreme scenario is a severe earthquake, which could cost US$74.4bn – more than double the city’s annual GDP of US$32.6bn.

 

Key global and APAC regional findings from the report are:

• Exposures are highest in a small number of cities: The 10 cities with the highest exposure to risk globally could together lose US$126.8bn each year, almost a quarter of all GDP@Risk,a finding that reflects the increasing concentration of wealth in certain geographic regions.

APAC accounts for half of the cities in the top 10 cities at risk, and three of the top five (#1 Tokyo, #3 Manila and #4 Taipei).

• Climate change is a major risk driver: Climate-related risks together account for US$123bn GDP@Risk globally, and this sum is expected to grow as extreme weather events become increasingly frequent and severe. Tropical windstorms, with a total estimated loss of US$59.1bn each year, are the largest threat to the GDP of APAC’s cities. Over half (54%) of APAC’s exposure comes from natural catastrophes.

• Building resilience is an urgent priority: The index also scores each city’s resilience based on criteria such as funding for emergency services and insurance levels. Of the 92 cities the index analyses in APAC, 16 are categorised as having very strong levels of resilience. This includes all Japanese, South Korean and New Zealand cities. However, 19 cities receive the lowest level of very weak. This includes all Indian and Pakistani cities. If all APAC cities included in the index were to achieve the highest resilience rating of very strong, then the GDP@Risk in the APAC region would decrease by US$34bn.


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