LONDON – Tokyo is the global city facing the highest risk to its annual economic output, due to its proximity to North Korea, according to an index compiled by the Lloyd’s of London insurance market.
New York ranks second in the risk index with nearly $15 billion in annual gross domestic product at risk, with a possible stock market crash considered its biggest threat.
Potential threats include everything from rare events, such as earthquakes, to concerns about more frequent incidents, such as cyberattacks.
The 279 cities in the Lloyd’s City Risk Index have a combined GDP of $35 trillion, and risk losing $547 billion in economic output annually as a result of 22 types of threats, the index showed on Wednesday.
More than $24 billion annually in GDP is at risk in Tokyo, with interstate conflict ranking as the city’s biggest threat.
Tokyo’s ranking “reflects the much greater risks around North Korea,” said Bruce Carnegie-Brown, chairman of Lloyd’s.
“Tokyo also has relatively poor resilience to interstate conflict because of its underinvestment in defense capabilities.”
A stock market crash is the costliest threat to gross domestic product for New York and some other U.S. cities, including Chicago and San Francisco, as well as Toronto, Montreal and Vancouver in Canada.
However, flooding poses the costliest threat, collectively, across cities in the U.S. and Canada.
North American cities feature highly in the global ranking, in part because a strong economy in the region means there is more to lose, Lloyd’s said.
An earthquake is the costliest threat for Los Angeles, Lloyd’s said.
Third-placed Manila has over $13 billion at risk, with tropical windstorms topping its risks.
London has more than $8 billion at risk, placing it ninth in the index, with a market crash seen as its biggest threat.
“Investing in resilience — from physical flood defenses to digital firewalls and enhanced cybersecurity, combined with insurance — will help significantly reduce the impact of extreme events on cities, improve economic stability and enhance prosperity for all,” Carnegie-Brown said.