If all goes wrong in the next decade, the D.C. area stands to lose $26.6 billion.
Or so says Lloyd’s of London, a London-based insurance market, which assessed how much money 301 cities around the world are vulnerable to losing from their economic output over the next decade from man-made and natural threats.
The City Risk Index determined the potential loss from 18 “catastrophic threats” on the gross domestic product of these cities. These threats include a market crash, power outage, flood, drought and terrorism.
The D.C. area — which, according to Lloyd’s, has an annual average GDP of $346.54 billion — is most vulnerable to a market crash, oil price shock and cyber attack. The city could stand to lose $8 billion of its GDP from a market crash alone, another $5 billion from an oil price shock and $4.5 billion from a cyber attack. (Here’s the full breakdown of what the D.C. region stands to lose from all the various threats, according to Lloyd’s.)
“Market crash represents the single biggest economic exposure, but this is only 32nd globally, reflecting the fact that although its exposure is large, it is not a main US financial centre,” Lloyd’s writes of Washington. “The impact of Oil price shock is 21st largest, even though the US has become one of the world’s biggest oil and gas producers as a result of recent hydraulic fracturing and the shale boom.”
By comparison, New York City stands to lose $25.14 billion of its GDP in the case of a market crash.
The U.S. cities that stand to lose the most from their GDPs are New York City, which is vulnerable to losing $90.36 over the next decade, followed by Los Angeles, Chicago, San Francisco and Houston, respectively. The D.C. area ranks sixth on the list.
Man-made risks, including market crash, nuclear accident and cyber attack, pose a risk to nearly half of the world’s GDP. And because of the increasingly connected world, these risks are compounded.
Lloyd’s, of course, says insurance plays a critical role in risk mitigation and “improving economic resilience to catastrophes.”
“Based on original research by the Cambridge Centre for Risk Studies at the University of Cambridge Judge Business School, the Index shows how governments, businesses and communities are highly exposed to systemic, catastrophic shocks and could do more to mitigate risk and improve resilience,” Lloyd’s in the introduction to the report.
Read the full City Risk Index report here.