India’s top cities Delhi, Mumbai and Bangalore have been listed and ranked in the latest edition of Lloyd’s City Risk Index. These cities are also in the global top 10 for GDP@Risk because of civil conflict. The index is used to analyze economic risk exposure for major population centers. Cambridge Center for Risk Studies defines it as the economic loss experienced by an economy over a five-year period compared to the baseline economic trajectory. In this, Delhi has been ranked at 5th position, Mumbai 6th, and Bangalore at 7.
There are other Indian cities in Lloyd’s CRI – Ahmedabad, Bengaluru, Chennai, Hyderabad, Kanpur, Kolkata, Pune, and Surat. These cities were chosen as they contribute significantly to India’s economy. It revealed that Delhi has an extreme interstate conflict scenario that could cost the city a whopping $225.2 billion, and an extreme flood or civil conflict could cost about $122 billion. The study highlights that the cities are threatened by civil and inter-state conflicts, while for Kolkata, it is the tropical windstorm. Natural catastrophes, financial economies & trade, and geopolitics & security are the top three classes of threats in the 2018 index.
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Other threats include human pandemics (US$1.7 billion) and flood (US$1.3 billion) GDP@Risk for the nation, respectively. Shankar Garigiparthy, Lloyd’s India Country Manager said India may be undermined by a rising spate of conflict in the region. India is fast becoming one of the most diverse and largest growing economies in the world.
Lloyd’s Chairman Bruce Carnegie-Brown said the index shows that investing in resilience, from physical flood defenses to digital firewalls and enhanced cyber-security, combined with insurance, will help to significantly reduce the impact of extreme events on cities. This will improve economic stability and enhance prosperity.
The 2018 Global Risk Index quantifies the impact of unpredictable shocks on the world’s most prominent cities, which together, yield about 41 percent of the global GDP. It has been noted that the main change between the 2018 index and the analysis for 2017 is an increase in risk from geopolitics and security threats (civil conflict, interstate conflict, and social unrest). The impact of geopolitics and security catastrophes has risen by 39 percent since 2015, the year of the first Global Risk Index.
This rise is attributed to high levels of political turbulence in developed economies. Policymakers can use the Index positively for civic continuity, economic security, and preparedness. It will help them identify the key drivers of risk to the economic prosperity of their cities. Overall, the Global Risk Index demonstrates the value of investing in resilience.