Swiss Re studies potential impact of natural disasters on over 600 urban areas

Swiss Re released Wednesday a report suggesting floods endanger more urban dwellers than any other natural peril, while San Francisco and Los Angeles are among the North American cities with the most people who could be affected by a single natural peril.

The report — titled Mind the Risk: A global ranking of cities under threat from natural disasters — focuses on the most severe natural disasters that could affect 616 of the world’s most populous urban areas. Swiss Re used its own risk models, as well as hazard data from CatNet, a software application from Swiss Re that combines natural hazard information with satellite imagery and Google maps.

The 616 urban areas have a combined population of about 1.7 billion (about 25% of the world’s total) with about US$34 trillion in gross domestic product, or 50% of the world’s total.

More than half are in Asia/Oceania, while 83 are in North and Central America, 90 are in Europe, 60 are in Africa and 49 are in South America.

“The study shows that floods endanger more city residents than any other natural peril, followed by earthquakes and storms,” according to Swiss Re. “When they occur, they can affect millions of people and significantly disrupt the economy. Urban dwellers in Asia’s megacities are especially at risk, with Tokyo, Manila and Hong Kong-Guangzhou topping the population-at-risk index.”

In addition to floods, earthquakes and wind storms, the report also studied tsunamis and storm surges.

Hurricane Sandy, which hit the West Indies and northeastern United States last October, destroyed 300,000 homes in the state of New York alone and left 8.5 million without power in New York, New Jersey and Connecticut, according to Swiss Re.

“The New York Stock Exchange closed trading for two full days, airlines cancelled more than 12,000 flights and about 70% of all East Coast oil refineries were shut down,” Swiss Re stated of Hurricane Sandy’s impact in the New York area.

In the Netherlands, Swiss Re added, the Amsterdam-Rotterdam area “is entirely located within a zone of highest risk and holds a top spot in the storm surge rankings, with 1.8 million people potentially affected.”

Although most sections of Amsterdam and Rotterdam are below sea level, “these areas are protected extremely well by massive storm surge defences, so the chance of catastrophic damage is substantially lower than in other lesser protected areas.”

Other European urban areas are vulnerable to winter storms, Swiss Re noted, with 2.2 million exposed in London, 1.1 million in Paris and one million in the Rhine-Ruhr area of Germany, which includes Bonn, Cologne and Duesseldorf.

Miami, meanwhile, has 1.4 million vulnerable to tropical cyclones.

The study also included a ranking of urban areas with the most people potentially affected, aggregated for all five perils. The top two were Tokyo-Yokohama  (with 57.1 million potentially affected) and Manila (with 34.6 million potentially affected).

Swiss Re combined Hong Kong, Shenzhen, Dongguan, Macau and Guangzhou into one urban area, dubbed the Pearl River Delta, with 42 million inhabitants. That area ranked third, with 34.5 million people potentially affected by all five perils.

Los Angeles ranked ninth, with 16.4 million potentially affected by all five perils.

“The report finds that metropolitan areas such as Tokyo, Los Angeles, New York and Amsterdam-Rotterdam rank high in terms of potential lost productivity, measured by the value of working days lost,” Swiss Re stated.

“For example, the report shows that while a devastating earthquake in Los Angeles could affect just as many people as in Jakarta, the resulting value of working days lost would be 25 times higher.”

Of the 83 urban areas Swiss Re analyzed in North and Central America, Los Angeles was considered the city with the most people – 14.7 million – potentially affected by a single scenario (earthquake). Mexico City ranked second, with 6.1 million people potentially affected by river flooding, while San Francisco ranked third, with five million potentially affected by earthquake.

“The potential damage that a large natural disaster can cause to roads, bridges, telecommunications and other essential infrastructure is perhaps nowhere more apparent than in the world’s big cities,” Swiss Re concluded.

“This is why strengthening urban resilience is also a prime concern for the insurance industry. As an ultimate risk taker, the insurance industry has a vested interest in new infrastructure investments, upgrades to ageing infrastructure and adaptation measures.”