Mind the risk: cities under threat from natural disasters

2013 - 2015

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About the project

The world's sprawling cities are centres of economic activity and growth. But when a natural disaster hits a densely populated area, the effects can be catastrophic. A Swiss Re study looks at the human and economic risks faced by urban communities around the globe.

Activities

Swiss Re and urban resilience

Swiss Re and urban resilience

Resilience is the key driver of sustainability. We cannot improve economic efficiency, protect and restore our ecological systems and enhance social well-being if we remain seriously vulnerable to natural disasters. This is what urban resilience is about. Swiss Re believes in urban resilience and eg supports The Rockefeller's Foundation 100 Resilient Cities initiative.

Related links:

Learn more about the topic on swissre.com

Urbanisation in emerging markets: boon and bane for insurers

Urbanisation in emerging markets: boon and bane for insurers

The world's urban population is forecast to grow by about 1.4 billion to 5 billion between 2011 and 2030, with 90% of the increase coming in the emerging markets. Swiss Re's sigma study Urbanisation in emerging markets: boon and bane for insurers reviews the rapid growth of towns and cities in emerging markets. It also addresses the opportunities and challenges that urbanisation presents with respect to risk management for insurers and governments alike.

Related links:

Read the whole article on swissre.com

Building climate resilient cities in the US and Canada

Building climate resilient cities in the US and Canada

Swiss Re has partnered with a number of organizations, including CERES and ClimateWise, to design and deliver workshops in the US and Canada to promote urban resilience. Urban resilience is an imperative of the insurance industry as it reduces losses, promotes the maintenance of insurability, and presents opportunities for innovative risk transfer and insurance solutions to help manage climate risk. By building public-private partnerships, city leadership and the insurance sector have the power to take the lead in building urban resilience and protecting lives and property.

Related links:

Building climate resilience cities in the US and Canada
Building resilient cities: from risk assessment to redevelopment
Building Climate Resilience in Cities: Priorities for Collaborative Action

Publications

Risky cities: Istanbul

Risky cities: Istanbul

Istanbul needs no reminding of the seismic threat lurking beneath the Mamara Sea, known as the Northern Anatolian Fault. It was this weakness in the earth's crust that caused the very destructive earthquakes back in 1999 close to the cities of Izmit and Kocaeli. Since then, both the government and the private sector have taken substantial measures to strengthen urban resilience and to increase insurance penetration, not least of which was the establishment of the Turkish Catastrophe Insurance Pool for homeowners. In a new publication entitled Risky cities: Istanbul, the latest in a series of factsheets analysing the natural catastrophe risks in a number of major cities across the world, Swiss Re experts highlight the potential loss scenario for a major earthquake hitting Istanbul. They also point to the further contribution the insurance industry can make towards strengthening financial resilience should such a scenario become reality.

Year: 2015

Risky cities: Los Angeles

Risky cities: Los Angeles

The Southern California Earthquake Center says there's a 67% chance that Los Angeles will be hit by a 6.7 magnitude quake or larger by 2034. Thirty years may seem long way off, but recent tremors, such as the August 2014 Napa Valley event, remind us of the possible risk. Los Angeles is a massive economic hub and highly exposed to earthquake risk. Using Swiss Re's risk models and detailed hazard data available in CatNetR, we have analysed the potential impact of this risk and other natural perils on LA's metropolitan area. Los Angeles' ability to bounce back after a major natural disaster event isn't just important for the immediate region, but for the global economy as well: the city has the largest seaport in the western hemisphere. But as we show in Risky cities: Los Angeles, it's not just about earthquakes and economics: millions in the region could be affected by river floods, storm surges and other natural perils as well.

Year: 2014

Risky cities: Mexico City

Risky cities: Mexico City

Mexico City is a flood-prone area due to its location. In addition, this Latin American metropolis is at risk for earthquakes. The flooding caused by Tropical Storm Ernesto in 2012 reminded many in Mexico City not only of the power of Mother Nature, but the lay of the land. This city lies in an ancient lake bed. This means that when it rains hard, like it did with Ernesto, the water has to be pumped out rather than be left to drain on its own. There are actual drainage systems, but they become clogged with garbage as the rain washes down. In Risky cities: Mexico City we examine not only flood risk, but the risk of earthquakes in this economic hub as well. Most importantly, we also look at the millions of people potentially impacted by the combined risk of natural hazards in the city.

Year: 2014

Risky cities: Tokyo-Yokohama

Risky cities: Tokyo-Yokohama

The Tokyo-Yokohama metropolis is one of the most densely populated regions in the world. It's also one of the most earthquake threatened in our rankings. The 2011 Tokohu earthquake and tsunami devastated a coastal region caused 20,000 people to lose their lives. And made the area's natural disaster exposure painfully clear: the quake and tsunami occurred only around 400 kilometers away from the Tokyo-Yokohama region, home of over 30 million people, making one of the most densely populated regions in the world.It is also the most earthquake-threatened in Swiss Re's Mind the risk, a global survey of cities under threat from natural disasters. In addition, the Tokyo-Yokohama region is on the coast and close to waterways, which means the area is also exposed to river flood. If an event comparable to Tokuhu were to happen closer to Tokyo-Yokohama, the results could be devastating.

Year: 2014

Jakarta – property protection gap

Jakarta – property protection gap

Jakarta is the engine behind Indonesia's economic growth. The city is confronted with a high risk from earthquakes and floods, and only a small part of the economy is insured against natural disasters. Without improved disaster preparedness, Jakarta could face a widening gap between economic and insured losses. As the city continues to grow and develop at a rapid pace, the gap between economic and insured losses that would result from a major flood or earthquake could jump heavily. Narrowing this gap is a challenge that Jakarta's authorities and the insurance industry must tackle together to secure the city's future development path.

Year: 2014

FAQ

The world's big and sprawling cities are centers of economic activity and growth. But many of them are also highly exposed to natural hazards. As more people move to the cities and businesses invest in their local economy, more lives and assets concentrate in disaster-prone areas. Strengthening the resilience of these communities is therefore becoming a matter of urgency. "Mind the Risk" is Swiss Re' central communications product informing our outreach effort on this important topic and demonstrates our thought leadership and knowledge in this area.

Why did Swiss Re do this study?

With the study, we aim to increase the awareness about natural disaster risk and the impact it can have on people and the economy, both from a global and local perspective. We also want to highlight the particular threat natural disasters pose to urban areas, which are densely populated and have a high concentration of properties and economic assets. Greater risk awareness supports adaptation measures which help save lives and allow businesses to prosper. In regard to the financial consequences of a disaster, Swiss Re provides capital to the real economy and pays out claims when disaster losses occur.

Have we ever seen the type of major disasters included in the analysis?

Yes we did, for example the Indian Ocean tsunami of 2004, the Japan earthquake/tsunami of 2011, and the Haiti earthquake of 2010 which hit and seriously damaged the capital city of Port-au-Prince. Other examples further back are Yangtse River Flood (1931), the Bhola Cyclone in Bangladesh 1970, or the Tangshan earthquake 1976 with hundred thousand of fatalities.

How frequently do we expect such events to occur?

We took a look at the really large natural disaster events. From the perspective of a single metropolitan area, these events are rare, i.e. they happen no more than every few hundred years. Globally speaking, however, such events are expected to happen every few years. These are events where protection measures typically fail because the force of the disaster exceeds the impact anticipated.

Who is our target audience?

First and foremost, the study is aimed at informing all relevant decision makers who are involved in urban (resilience) planning such as city/local authorities. It is also targeted to commercial businesses and insurance companies active in this field; to individuals and home owners; as well as to international/regional development banks who focus on financing developing economies.

What insurance products are available and relevant for our clients?

Swiss Re offers a wide range of products for a variety of risks that could affect urban areas. Here are a few examples in the context of city resilience:

  • Standard fire and allied perils insurance is often insured by a local insurance company where Swiss Re offers reinsurance coverage to mitigate peak losses.
  • For public sector clients and local authorities, this could include covers for damage to property and infrastructure caused by earthquakes, flood, or fires.
  • For corporate clients tailor-made coverage with various structures is offered.
  • Furthermore, we provide covers for cancelled large social or sporting events, which are held regularly in cities.