BRISBANE FACES MULTI-BILLION DOLLAR ECONOMIC RISK

Written on the 7 September 2015

BRISBANE FACES MULTI-BILLION DOLLAR ECONOMIC RISK

BRISBANE'S economy risks a US$11.17 billion blow from a series of manmade and natural threats over the next decade, according to Llloyd's.

The insurance market specialist's City Risk Index 2015-2025 analyses gross domestic product (GDP) at risk across 301 major cities.

Findings indicate that a total of US$4.6 trillion of projected GDP is at risk from disasters, based on original research conducted by the Cambridge Centre for Risk Studies.

Australia's top six cities have more than US$81 billion at risk, with significant exposure to natural threats including drought, heatwaves, floods and earthquakes.

Brisbane is most vulnerable to a market crash, which accounts for more than half the city's GDP at risk. This was followed by the potential for cyber-attack and significant losses from human pandemic.

Lloyd's general representative in Australia Chris MacKinnon says it's important to be aware of the economic risk exposure across major cities.

"While in Australia we are all too aware of the perils bushfire, flood or storm, we should be increasingly aware of a number of emerging threats highlighted in the report," MacKinnon says.

"Solar storms, human or plant pandemic or cyber terrorism are emerging threats which need to be considered and while the insurance industry continues to innovate with specialist insurance and reinsurance coverage, government, business and communities must work together to create a more resilient response to a major event.

"Increasing insurance cover is an essential tool in mitigating risk and reducing the burden which often falls on governments and taxpayers to fill the gap."

He says a 1 per cent lift in insurance penetration equates to a 13 per cent reduction in uninsured losses, which cuts taxpayer contribution by 22 per cent after a disaster.

The findings aim to show the need for governments and businesses to work together to build more resilient infrastructure and institutions, to facilitate quicker recovery following a catastrophe.

 


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