The global economy could face losses of $14.5 trillion over a five-year period from a hypothetical geopolitical conflict causing widespread disruption to global trade patterns and supply chains, top insurance and reinsurance marketplace Lloyd's of London warned on Wednesday.
The economic impact would result from severe damage to infrastructure in the conflict region and the potential for compromised shipping lanes, Lloyd's said in a statement, evaluating the potential scenario that reveals losses the global economy could be exposed to.
Wars in Ukraine and Gaza have already disturbed shipping routes in the Black Sea and the Red Sea.
"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," Lloyd's said.
The possibility of such a geopolitical conflict was a systemic or low likelihood but high impact risk, Lloyd's said.
Lloyd's said it has also researched other potential systemic risks in partnership with the Cambridge Centre for Risk Studies, including cyber attacks and extreme weather events.
