by Elise Linscott
Los Angeles was recently named the second most at-risk city in the country, with more than $90 billion in GDP at risk if disaster struck, according to Lloyd’s City Risk Index.
Based on research by the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School, the study looked at 18 manmade and natural threats over the next 10 years. In many US cities, the largest threats to projected GDP are market crash, oil price shock, cyber attack, earthquake, flood, drought and human pandemic, among others.
“Identifying the risks, modeling and measuring their impacts, and investing in greater resilience – from better infrastructure to increased insurance protection – are the first steps in this process,” the study noted.
In terms of other Western US cities, San Francisco came in at number four on the list, with San Diego at number 11, Seattle at number 13, Phoenix at number 16, Portland at 18 and Denver at 19.
The study estimates that about 11% of Los Angeles’ total GDP is at risk, and that its average annual GDP is about $828 billion. The top five threats are market crash, earthquake, flood, oil price shock, and cyber attack, which the study estimates could cause between $10-$20 billion in losses each.
New York City narrowly beat out Los Angeles for the number one spot with an estimated $90.36 billion in GDP at risk – $90.32 billion was estimated for Los Angeles. But New York and Los Angeles have exceedingly higher risks than other U.S. cities; Chicago, at number 3, has only $42.35 billion at risk, with $41.35 billion at risk in San Francisco.
The study also makes a case for increased insurance presence in preventing future costs. “A 1% rise in insurance penetration translates into a 13% reduction in uninsured losses – a 22% reduction in taxpayers’ contribution following a disaster.”
