- Man-made rather than natural disasters are a bigger threat to Australia.
- The latest Lloyd’s City Risk Index shows almost half (49%) of Australia’s economic output would be at risk in a financial market crash.
- Cyber attack risk threatens more than $US1.3 billion of Australia’s GDP.
An extreme cyber attack or market crash are bigger threats to Australia’s economy than any potential natural disaster, according to Lloyd’s, the insurance and reinsurance market.
The insurer says man-made threats account for more than two-thirds (69%) of the risk to Australia’s economic output annually.
In the latest edition of Lloyd’s City Risk Index, a financial market crash is calculated as the largest threat to Australia’s GDP, placing $US3.6 billion at risk, or almost half (49%) the annual total at risk of $US7.4 billion.
“While we often worry about natural disasters owing to their devastating effects, more attention must be paid to rising man-made threats,” says Lloyd’s Australia Country Manager, Chris Mackinnon.
“As Australia’s economy expands and our digital infrastructure becomes more complex, the threat of a market crash or major cyber-attack grows. We already see there is room for Australian cities to improve their infrastructure to be on par with the world’s most resilient cities.”
Here are the key risks to Australian cities in US billions of dollars:
Of the six cities in Australia included in the index, Sydney and Melbourne have the most economic output at risk. The other cities are Perth, Brisbane, Adelaide and Canberra.
Cyber attack is ranked the second largest threat to Australia’s GDP with $US1.3 billion at risk followed by the threat of a human pandemic, which would cost an estimated $US800 million.
The threat of floods ranks fourth, putting potentially $US660 million at risk in Australia’s major cities.
Lloyd’s index was developed in collaboration with the Cambridge Centre for Risk Studies and measures GDP risk from 22 separate threats in 279 cities across the world.
The index includes an assessment of the estimated cost to each city’s GDP from a threat.
For Sydney, this shows that a sovereign default could cost the city $US94.8 billion, an extreme cyber attack could cost $US58.8 billion and a market crash $US54.2 billion.