According to the latest “Lloyd’s City Risk Index 2018”, compiled by the University of Cambridge and the British insurance and reinsurance market Lloyd’s of London, the Peruvian capital Lima is the 4th riskiest city in Latin America and positioned 39th on a global level.
The Lloyd’s City Risk Index measures the GDP@Risk of 279 cities across the world from 22 threats in five categories: finance, economics and trade; geopolitics and security; health and humanity; natural catastrophe, climate, technology and space.
The index shows how much economic output (GDP - gross domestic product) a city would lose annually due to various types of rare risk events that might only take place once every few years, such as an earthquake, or from more frequently occurring events, such as cyber-attacks. You might also look at it the other way and say that the GDP@Risk equals the money a prudent city has to put aside each year to cover the costs of a risk event.
For the Latin America City Risk Index 2018, 31 cities were analyzed considering 11 main risks including market crash, earthquake, civil conflict, sovereign default, human pandemic, tropical windstorm, flood, volcano, social unrest and interstate conflict.
After Mexico City / Mexico (US$ 7.78bn), Sao Paulo / Brazil (US$6.54bn) and Buenos Aires /Argentina (US$ 4.94bn), the Peruvian capital Lima is the 4th city at risk in Latin America with expected / projected loss figures of US$ 3.88 bn in case an existing threat causes economic output losses.
Lima’s high ranking in the Latin America City Risk Index is due to its vulnerability to earthquakes, which is expected to cost the city US$1.40bn annually from the rare events that will take place from time to time. Other critical factors in Lima are expected losses of US$ 1.30bn in case of a market crash, US$ 0.43bn in case of an interstate conflict, US$ 0.36bn when civil conflicts erupt and US$ 0.24bn due to a human pandemic.