The Middle East’s 16 largest centres of economic growth could put US$367 billion of GDP at risk from a series of threats over the next decade, according to new research by Lloyd’s.
The Lloyd’s City Risk Index found the 21 cities of Abu Dhabi, Ahvaz, Amman, Baghdad, Beirut, Damascus, Doha, Dubai, Esfahan, Jeddah, Jerusalem, Karaj, Kermanshah, Kuwait City, Mashhad, Riyadh, Sana’a, Shiraz, Tabriz, Teheran and Qom together will generate an average annual GDP of $2.4 trillion in the coming decade.
Across the region, the largest GDP exposures are to market crash ($143.3 billion), earthquake ($85.17 billion), human pandemic ($41.40 billion), sovereign default ($30.16 billion), and terrorism ($25.68 billion).
Teheran has the most GDP at risk with $64 billion exposed. More than half of this ($34.5 billion) is from earthquake, as the city lies on several major fault lines.
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 the hajj 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.
The Lloyd’s City Risk Index presents the first-ever analysis of economic output at risk in 301 major cities from 18 man-made and natural threats over a 10-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 in these major cities around the world.
Mr Mark Cooper, Lloyd’s Middle East General Representative, said: “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 man-made 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 $143 billion could be at stake.
“Whilst insurance is part of the solution to improve resilience to these threats; and the industry continues to innovate with specialist re/insurance coverage; government, business and communities must work together to create a more resilient response to a major event.”