The Middle East’s 16 largest centres of economic growth could have $367 billion of GDP at risk from a series of threats over the next decade, according to new research for Lloyd’s.
The Lloyd’s City Risk Index presents the first ever analysis of economic output at risk in 301 major cities from 18 manmade and natural threats over a ten-year period.
Based on original research by the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School, the Index finds that a total of $4.6 trillion of projected GDP is at risk from manmade and natural disasters in these cities around the world.
In the Middle East, the Index found the cities of Abu Dhabi, Ahvaz, Amman, Baghdad, Beirut, Damascus, Doha, Dubai, Esfahan, Jeddah, Jerusalem, Karaj, Kermanshah, Kuwait City, Mashhad, Riyadh, Sana'a, Shiraz, Tabriz, Tehran, and Qom together will generate an average annual GDP of $2.4 trillion in the coming decade.
However, 15 percent of this economic growth is at risk from the combination of 18 manmade and natural threats.
Riyadh has the most GDP at risk from human pandemic in the region at $5.16 billion reflecting the flow of almost two million pilgrims who make Haj each year.
In the financial trading hubs of Dubai and Abu Dhabi, market crash is the greatest exposure accounting for almost half of the GDP at risk.
Across the region, the largest GDP exposures are to market crash ($143.3bn), earthquake ($85.17bn), human pandemic ($41.40bn), sovereign default ($30.16bn), and terrorism ($25.68bn).
According to the study, Tehran has the most GDP at risk with $64 billion exposed, more than half of this is from earthquake as the city lies on several major fault lines. It has the second largest amount of GDP at risk from earthquake behind Lima.
Lloyd’s said it has produced this Index to help increase the understanding of, and shape the world’s response to, the shifting risk landscape.
The findings showed the need for governments and businesses to work together to build more resilient infrastructure and institutions.
Inga Beale, CEO of Lloyd’s said: “Insurers, governments, businesses and communities need to think about how they can improve the resilience of infrastructure and institutions. Insurance is part of the solution.
“Insurers must continue to innovate; ensure their products are relevant in this rapidly changing risk landscape, offer customers the protection they need and, as a result, contribute to a more resilient international community.”
Mark Cooper, Lloyd’s Middle East General Representative, added: “Lloyd’s City Risk Index highlights the economic exposure of the major cities in the Middle East and the significant levels of GDP at risk from both manmade and natural threats.
“We are all too familiar with some of the natural threats and have robust contingency plans in place; however, we should be increasingly aware of a number of manmade and emerging threats highlighted in the report and the importance of risk management to mitigate the potential economic impact.
"The study shows that a market crash is the greatest economic vulnerability and this is also true in the Middle East, where $143bn could be at stake."For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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