World Economy

These risks could cost the world $4.6 trillion

Luke Graham, Special to CNBC
The 18 biggest risks for global cities

Over $4 trillion of economic output is at risk in the world's largest cities due to a host of dangers ranging from earthquakes, pandemics, nuclear disasters, terrorism, tsunamis and cyberattacks, according to a new study from Lloyd's of London.

The study, called the "The Lloyd's City Risk Index", analysed how gross domestic product (GDP) in 301 major cities around the world would be affected by 18 man-made and natural disasters over a ten-year period from 2015 to 2025.

It found that a massive $4.6 trillion of projected GDP was at risk from man-made and natural disasters in cities everywhere.

"The change risk landscape means that these risks...are becoming much more intangible. We've got technology making everything more interconnected, so you've got things like cyber attacks, market crashes, oil price crashes. This is the new emerging type of risk that all businesses and governments are being faced with today," Inga Beale, CEO of Lloyd's of London, told CNBC Thursday.

Hurricane Katrina created a heap of debris and destruction near the Grand Casino September 1, 2005 in Gulfport, Mississippi. Most local residents and businesses along the beach front lost everything due to hurricane Katrina.
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The report looked at 18 different threats, including power outages, nuclear accidents, cyberattacks and human pandemics, in order to measure GDP at risk, which is the loss of economic output caused by a disaster, relative to the expected economic output of a city.

The index will be updated every two years. This year's version found that emerging economies were most vulnerable to natural disasters and bear two-thirds of risk related financial losses.

Overall, market crashes were the greatest threat to economies, representing nearly a quarter of all cities' potential losses.

"The measure GDP at risk makes it possible to combine and compare a very wide range of threats, including those that are disruptive and costly, such as market collapse, in addition to destructive and deadly natural catastrophes," Daniel Ralph, academic director of Cambridge Centre for Risk Studies, said in a news release.

The report also suggested some solutions to mitigate risk, such as increasing insurance. According to the report, a 1 percent rise in insurance penetration could reduce uninsured losses by 13 percent.

Lloyd's of London, commonly known as Lloyd's, is an insurance market located in the City of London.

—With contribution from CNBC's Kalyeena Makortoff.