Published: 16 June 2015 at 09:46
The vulnerability of the global food system to sudden shocks, and the repercussions for communities, businesses and governments, is highlighted in a report published by Lloyd's, the specialist insurance and reinsurance market.
Supported by academics at Anglia Ruskin University, the report contains a scenario where disruptions such as weather catastrophes and plant pandemics - which are exacerbated by climate change - have far-reaching economic and humanitarian consequences.
Launched at Expo Milano 2015, the study shows how three events - El Nino, the spread of windblown wheat rust in Russia and warmer temperatures in South America - could lead to wheat, maize, soybean and rice prices quadrupling, significant losses on European and US stock markets, food riots and wider political instability.
The key findings of the report are:
Dr Aled Jones, Director of Anglia Ruskin University's Global Sustainability Institute, who worked on the report, said:
"Food security is of increasing concern to regulators, insurers and society more generally.
As the world moves increasingly towards a globalised system, we are able to provide more and more food to people who need it. However, the connectedness of our system also means a food production shock in one part of the world can have far reaching consequences, as we saw during the Arab Spring.
"The Global Sustainability Institute at Anglia Ruskin University, through its Global Resource Observatory, is modelling the impacts of food shocks on finance and social systems. By better understanding these likely impacts, both direct and indirect, we hope to help inform policy and organisational responses to manage this risk."
Tom Bolt, Director of Performance Management at Lloyd's, said:
"Traditionally insurers look only at the financial and physical impact of catastrophes. But in today's interconnected world, these events can have complex and far-reaching economic and humanitarian implications.
"The insurance industry has a key role to play in improving the resilience of communities, businesses and governments. Our role is not only to ensure that our ability to pay claims helps them to recover quickly from these events, but to ensure they have a greater awareness of the complex risks they face in a globalised world."
Download the full report from the Lloyd's website.