MANILA, Philippines - Tokyo, Metro Manila and Hong Kong-Guangzhou are megacities that top the Asian list of most dangerous places to reside in the event of a major natural disaster like floods, earthquakes or storms.
In a study made by Swiss Reinsurance Co. Ltd. (Swiss Re), one of the global leaders in insurance and reinsurance, roughly 45 million individuals are at risk in the three megacities.
“The world’s riskiest metropolitan areas are located in Asia, especially in China, Taiwan, Japan and the Philippines. Hosting several million people in densely populated conurbations, Asia’s cities are likely to be the hardest hit by natural catastrophes, both in terms of absolute numbers of potentially affected people and economic impact,†the report said.
Metro Manila has a lot of cities along coastal areas, which are among the most endangered by storm surge, as experienced by the Leyte and Samar provinces caused by Super Typhoon Yolanda.
East Asia, where Metro Manila is located, is most at risk because typhoons, which have the highest wind speeds, regularly hit the region. It is also high in the risk index in terms of tsunami impact.
Earthquakes can affect the majority of the population, with Asia again among the most affected in seismically active or exposed regions.
In locations with a multi-hazard risk, the probability of an event increases substantially.
Swiss Re made it clear that the major cities in Asia that are top on the list of multi-hazard risk areas are: Tokyo-Yokohama, Osaka-Kobe and Nagoya in Japan; the Pearl River Delta in China; Taichung, Taipei, Tainan-Kaohsiung in Taiwan; and (Metro) Manila in the Philippines.
“This amplifies the threat to their inhabitants and economies,†it pointed out.
Natural catastrophes do not only affect people, it also disrupts the economy in the affected area, and beyond.
In the case of Thailand, where the global and regional assembly line of automobile manufacturers were disrupted, and took heavy losses in terms of delays in delivery. Total direct and indirect economic losses reached $47 billion, the most expensive freshwater flood in history.
“Savings lives is and should be the highest priority in risk mitigation efforts. However, higher living standards in many cities mean that demand for better protection measures is also set to increase, especially in the world’s high growth markets. Combining such measures with insurance covers for residual risk is the most cost-effective and recommended approach.â€
Unfortunately, insurance coverage remains wanting in the case of Asia. In the case of the Philippines, both the public and private sector acquire insurance coverage which are mandated by law, which is very little, if in existence at all.
Asia is set to emerge as the region with the highest economic loss potential and the biggest gap between economic and insured losses within the next decades.
Investments in infrastructure are vital to strengthen the resilience of metropolitan areas. The potential damage that a large natural disaster can cause to roads, bridges, telecommunications and other essential infrastructure is perhaps nowhere more apparent than the world’s big cities.
This is why strengthening urban resilience is also a prime concern for the insurance industry.
As an ultimate risk taker, the insurance industry has a vested interest in new infrastructure investments, upgrades to ageing infrastructure and adaptation measures.
The study pointed out that the impact of a large natural catastrophe could be avoided only to a certain extent. There will always be costs for relief, recovery and reconstruction efforts, and they will constitute a financial burden for the affected region.
However, insurance can help soften the impact by offering risk transfer products that help narrow the wide gap between economic and insured losses.
The world’s sprawling cities are centers of economic activity and growth. But when a natural disaster hits a densely populated area, the effects can be catastrophic.
For the first time in human history, more people live in cities than in rural areas.
The United Nations forecasts that 6.3 billion or 68 percent of the world’s population will be living in urban areas by 2050.
Floods, storms, earthquakes and other natural hazards continue to threaten many of these metropolitan areas.
As people continue to move to the cities and businesses invest locally, more lives and assets concentrate in disaster-prone areas. Strengthening the resilience of these communities is therefore becoming a matter of urgency.
The Swiss Re report provides a global risk index comparing the human and economic exposure of 616 cities around the world. Together, these are home to 1.7-billion people and produce a combined gross domestic product (GDP) of $35 trillion, half of the world’s total economic output.
On an annual average, natural catastrophes resulted in $60 to $100 billion in losses.
The study shows that floods endanger more city residents than any other natural peril, followed by earthquakes and storms. When they occur, they can affect millions of people and significantly disrupt the economy.