London a top-ten 'megarisk' city

The world's largest reinsurance company, Munich Re, revealed that Tokyo, San Francisco and Los Angeles were the cities exposed to the greatest risk from natural disasters, with London ranked 9th, just ahead of Paris at ten.

Munich Re urged governments and urban planners to take disaster risks more fully into account when approving sites for development, and to take more preventative measures.

Stefan Heyd, the company's head of corporate underwriting, said such "megacities" brought a new dimension of risk to the insurance business.

"Megacities are exposed to all the classic risks, but their exposure and vulnerability are disproportionate," Heyd said. "They create risks of new proportions - megarisks."

Munich Re gave Tokyo the top rating on its list of vulnerable megacities, saying it combined huge population with vulnerability to volcanic eruption, earthquakes, tropical storms, tsunamis and flooding.

With a risk index of 710, Tokyo and its 35 million inhabitants were far ahead of number two, the San Francisco Bay area, which rated 167, mainly due to Tokyo's high risk of multiple disasters, its huge population and roughly 40% share of the country's economy.

Los Angeles rated 100. The US cities were rated riskier than more heavily populated areas such as Mexico City - also at high risk of earthquakes but not in the top ten - because the amount of economic loss was judged to be potentially greater.

Flood barrier

London's risk index of 30 was based mainly on winter storms. Other cities in the top ten were Manila, Osaka, Seoul, Hong Kong, Bangkok and Miami.

The report came out as proposals for a 10-mile barrier across the Thames to prevent a potential large scale disaster in Britain's capital began to emerge.

If it went ahead, the huge embankment from Sheerness in Kent to Southend on the other side of the estuary in Essex, would be the biggest engineering project Britain has seen. The scheme has been proposed by leading scientific experts on climate change who believe much of central London could soon be submerged if current trends continue.

According to London's Evening Standard, details of the plan will be revealed at a climate change conference to be convened by the Prime Minister next month.

Those behind the plans believe that the existing Thames Barrier, built in the 1970s, will be unable to deal with the rising tides in years to come because London is still sinking while the global sea level is rising.

Darren Johnson, chair of the London Assembly Environment Committee, said: "When the current Thames Barrier becomes obsolete, the effect on London could be absolutely catastrophic.

"Parts of the city could be rendered uninhabitable, causing additional problems in terms of health and accommodating displaced Londoners. The weekend's floods bring a stark reminder of the growing threat of climate change."

'Most expensive'

According to Munich Re's new report, major cities also face greater risk of damage from industrial accidents, air disasters and terrorism.

"The losses that may be caused by natural hazards, technological risks, terrorism and even epidemics must be identified and modelled in advance," said Stefan Heyd. "This is the only way to ensure that the enormous range of megacity risks can be insured on a sustainable basis."

The study was prepared for next week's UN conference on disaster reduction in Kobe, Japan - which suffered what the report said was the most expensive natural disaster ever, a 1995 earthquake that took 6,000 lives and caused more than £50 billion in damage.

Separately, Munich Re said the impact on its finances from the Boxing Day Asian tsunami would be between £25 million and £500 million.

Munich Re's report entitled 'Megacities - Megarisks: Trends and challenges for insurance and risk management' is available to download in full from the publications section of its website.