Far out Friday: Property trumps volcanoes and floods as biggest economic risk

by NZ Adviser13 Nov 2015
KPMG New Zealand's general insurance update has revealed findings from Lloyds City Risk Index on the five biggest risks to Auckland's GDP, with a market crash which could put a US$3,560 million dent in the economy coming top, according to an article in the NZ Herald

Floods were listed as the second biggest risk (US$590 million) and an oil price shock as third US$580 million, with a volcanic eruption (US$540 million) as the fourth costliest risk to the Auckland economy.

A human pandemic was the fifth and lowest risk which would have a possible impact of US$370 million. 

Both Auckland and Wellington were included in the research with a market crash topping the list of what could have the biggest GDP impact on those cities.

Wellington would suffer less from another global crash with an estimated US$600 million hit.

KPMG head of insurance Kay Baldock, said it decided to include the Lloyds research in their update to highlight risks in New Zealand that not everyone may have thought about but says the risks of the events occurring were low.

"If you are in New Zealand the top risk that comes to mind is a natural disaster. 

"The probability of any city being affected over the next 10 years is low."

KPMG audit partner Jamie Munro said a market crash would be caused by a global financial melt-down impacting New Zealand rather than being caused by a local event .

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