Risks evolve as cities transform into tech hubs

Risks evolve as cities transform into tech hubs | Corporate Risk & Insurance

Risks evolve as cities transform into tech hubs

What will our future cities look like? Flying cars and smart, sustainable skyscrapers are just the start of it. 

Look at the Canadian city of Toronto in the not so distant future, as an example. Last fall, the city announced that Google’s corporate sibling, Sidewalk Labs, would create a futuristic metropolis in a run-down part of Toronto’s waterfront. Prime Minister Justin Trudeau said the initiative would create “technologies that will help us build smarter, greener, more inclusive” communities.

“While risks to cities will always exist, the future shows great opportunity to mitigate against them as we continue pushing for dialogue and greater understanding of the perils and potential solutions,” said Sean Murphy, president of Lloyd’s Canada. “More than half of the world’s urban spaces are yet to be built, and aging cities like London and Paris are already addressing aging infrastructure.

“As new technologies develop that can protect cities from risks across the board, these new and improving cities can create a blueprint for other cities to build resilience to the evolving manmade and natural perils that threaten their communities.”

The latest Lloyd’s of London CityRisk Index analyzes GDP@Risk in 279 cities worldwide. It defines GDP@Risk as an expected loss figure based around a city’s exposure to 22 threats in five categories: finance, economics and trade; geopolitics and security; health and humanity; natural catastrophe and climate; and technology and space. Man-made threats, linked in part to technological developments in our cities, account for 59% of the total GDP@Risk.

The report states that North American cities have a high potential economic loss from technology and space risks, which include cyber attack (US$14.73 billion), solar storm (US$4.10 billion), power outage (US$1.79 billion) and nuclear accident (US$682 million). They’re particularly at risk of cyber attack, with six North American cities ranking in the top 10 globally in terms of GDP@Risk due to a cyber peril. The top three cities in the US which stand to lose the most GDP to cyber threat each year are New York (US$2.35 billion), Los Angeles (US$1.44 billion) and Chicago (US$0.92 billion). In Canada, Toronto could lose US$430 million. 

“Given a number of North American cities function as major business and economic centers, it’s not surprising that their economies have potentially significant impacts in the face of a cyberattack,” Murphy told Insurance Business. “Other technology and space threats include power outage, solar storm and nuclear accident. While these are not insignificant perils, they’re not the driving force behind North American cities’ dominance of the global rankings for technology and space threats.”

North American vulnerability to technology and space threats is likely to continue as the western super powers continue to transform urban hubs into futuristic metropolises.

 

Related stories:
Aftermath of disaster: closing the protection gap
Business interruption the dominant fear among Canadian companies