Asia home to world’s most vulnerable cities to natural disasters: Verisk Maplecroft

A substantial number of the 100 most vulnerable cities in the world to the perils of natural disasters are situated in the Philippines, China, Japan and Bangladesh, according to recent findings from Verisk Maplecroft, a Verisk Analytics division.

International risk analytics company, Verisk Maplecroft’s latest Natural Hazards Risk Atlas (NHRA) has been launched, aiming to offer a comprehensive assessment of natural hazard risks across an impressive 1,300 cities around the world.

In its 5^th edition, the annual NHRA reveals that 56% of the 100 most exposed cities to natural disasters are situated across just four countries, with 21 located in the Philippines, 16 in China, 11 in Japan and eight in Bangladesh.

And most susceptible to a range of natural perils is the Philippines, with eight of the country’s cities ranking in the top ten for most at risk globally, the study finds.

However the most exposed city in the world, according to the study, is Port Vila in Vanuatu, a city that only in the last few days has suffered a devastating blow from Cyclone Pam as it swept through the exposed Pacific Island nation. More on Cyclone Pam here.

“The analysis considers the combined risk posed by tropical storms and cyclones, floods, earthquakes, tsunamis, severe storms, extra-tropical cyclones, wildfires, storm surges, volcanoes and landslides,” explained Verisk Maplecroft.

Research suggests that the three highest placed Philippine cities at risk, Tuguegarao (2^nd), Lucena (3^rd) and Manila (4^th), are extremely exposed to the impacts of earthquakes, typhoons, landslides and severe storms, which can also bring intense storm surge and flooding.

Businesses that operate in the cities with high exposure levels can benefit from the latest NHRA release, claims Verisk Maplecroft, which is “designed to help businesses, investors and international organisations compare the risks of natural hazards within 198 countries and assess their resilience during and after the occurrence of a natural hazard.”

Natural hazards pose a threat for economies and societies globally, while also contributing to severe disruption in business supply chain and growth prospectus, particularly for emerging and developing regions.

“Understanding how, where and why those risks manifest is an imperative in managing potential shocks,” advised Dr Richard Hewston, Principal Environmental Analyst at Verisk Maplecroft.

And that’s precisely what the firm’s latest NHRA platform aims to do, via sub-national mapping, country scorecards and a unique Socio-economic Resilience Index.

Improving resilience to natural disasters is key for any business to operate sustainably and efficiency, nowhere more so than developing areas of the world, like the Philippines.

Typically, emerging market businesses are in areas that experience significantly lower levels of insurance penetration and often rely heavily on foreign investment for capital.

Hewston highlights that when deciding on markets to enter companies are increasingly looking at “institutional robustness” and “strength of infrastructure,” meaning “those which are unable to demonstrate robust resilience may lose an element of their competitiveness.”

Which for emerging market participants can be fatal, as overseas investments are vital in offsetting the minimal capacity provided by domestic insurance, reinsurance and similar finance mechanisms.

Across the Association of Southeast Asian Nations (ASEAN) the average insurance penetration rate is roughly 3%, and at the end of 2013 insurance penetration levels in the Philippines was roughly 1.77%, compared with 1.02% in 2009, reports suggest.

So while growth is evident it’s still someway off the regional average, emphasising the necessity for businesses to operate efficiently and remain attractive to investors, despite high-risk exposure levels.

The current reinsurance market is flush with traditional and alternative capital that would be put to good work being deployed into covering risks in these exposed cities, like those highlighted by Verisk’s NHRA.

Elevated insurance penetration levels coupled with innovative, affordable protection for businesses and citizens alike will help to better build the resilience of country’s like the Philippines.

And as tools like the latest NHRA highlight the inherent risks within countries and cities, emerging market participants would be wise to build their disaster resilience, ensuring investors don’t look elsewhere.

Also read:

– Re/insurance industry calls for action on disaster risk at Sendai meeting.

– Risk transfer & re/insurance key to raising world’s disaster resilience.

– Cyclone Pam may trigger Pacific Catastrophe Risk Insurance Pilot.

– Catastrophe model gaps an opportunity for reinsurance and ILS: Karen Clark.

– Economic cost of flooding could hit $500 billion+ by 2030.

– UN report reveals re/insurance & ILS can do more on disaster resilience.

– Investor pressure to stimulate catastrophe re/insurance demand.

– Parametric triggers can ensure business interruption recovery: Marsh.