A hypothetical geopolitical battle that affects supply chains may cost the world economy $14.5 trillion over five years, according to insurance market Lloyd’s of London on Wednesday.
The potential for compromised shipping lanes and significant damage to the conflict region’s infrastructure would have an economic impact, according to a statement from Lloyd’s.
Laptops 1000The wars in Gaza and Ukraine have already disrupted shipping lanes in the Black and Red Seas.
“With more than 80% of the world’s imports and exports – around 11 billion tons of goods – at sea at any given time, the closure of major trade routes due to a geopolitical conflict is one of the greatest threats to the resources needed for a resilient economy,” stated Lloyd’s.
There is a systemic risk—a low likelihood but significant impact—of a geopolitical clash of that kind.
According to Lloyd’s, it has also looked into other possible systemic risks, including cyberattacks and extreme weather, in collaboration with the Cambridge Centre for Risk Studies.
