Protecting physical collectibles from physical damage typically involves using some form of structure with special features. For example, art collections can be kept in climate-controlled environments with sensors to detect rising ambient moisture levels. Even so, a natural disaster like a wildfire, flood, or earthquake can put any such structure at an exponentially higher risk of being compromised.
For smaller collectibles like rare coins, it is possible to invest in structures like safes that can survive almost anything nature can throw at it. But for larger (and larger collections of) collectibles like luxury cars, it is often impractical to take such measures. Also, the owners of such valuable items typically prefer to keep them on display – not locked away – to be enjoyed by themselves and guests.
For UHNWIs with a global mindset, a more practical approach will likely be to collect valuables in homes in geographical areas that are statistically unlikely to be affected by the most destructive natural disasters. Here are recommendations for identifying such areas, assuming that wealthy individuals will prefer to own homes in reasonably prosperous and well-populated metropolitan centers.
Defining the Risks: Types of Natural Disasters Most Likely to Destroy Luxury Homes
The natural disasters and extreme weather most likely to obliterate houses include:
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- Tsunamis. A tsunami is a series of powerful ocean waves typically caused by events such as underwater earthquakes, volcanic eruptions, or landslides. Waves can travel across entire oceans and cause devastating inundation upon reaching coastal areas.
Cities at most risk of being affected by tsunamis are located along coastlines near subduction zones.
Examples: Honolulu, Tokyo
- Hurricanes/Typhoons/Cyclones. These storms form over warm ocean waters when a cluster of thunderstorms becomes organized and rotates due to a combination of low wind shear (changes in wind speed and/or direction with height) and the Coriolis effect (an effect of Earth’s rotation). As warm, moist air rises and condenses, releasing heat, the storm intensifies. They are called hurricanes when forming on the North Atlantic, Northeast Pacific, and Central North Pacific Oceans, typhoons when forming on the Northwest Pacific Ocean, and cyclones when forming on the South Pacific and Indian Oceans.
Cities at most risk of being affected by these storms are located in tropical and subtropical coastal regions.
Examples: Miami, Hong Kong
- Powerful tornadoes. A tornado is a violently rotating column of air extending from a thunderstorm to the ground. It forms when wind shear creates a rotating horizontal vortex that is then tilted vertically by a thunderstorm’s updraft in a highly unstable atmosphere (warm air below, cold air above).
Cities at most risk of being affected by powerful tornadoes are located in regions with specific meteorological conditions most frequently found in the central United States, often referred to as “Tornado Alley.” While large metropolitan areas are less likely to experience a direct hit from a powerful tornado, surrounding areas and smaller cities within these regions are at risk.
Examples: Oklahoma City, Dallas-Fort Worth, Kansas City
Wildfires. Wildfires typically occur in areas with dense vegetation, dry climates, steep slopes, and high winds.
Examples: Los Angeles, Sydney, Cape Town.
- Earthquakes. The majority of earthquakes occur along tectonic plate boundaries, where the interaction of moving plates creates stress that is released as seismic waves, sometimes triggering other hazards like tsunamis and landslides.
Examples: Tokyo, Los Angeles, Istanbul
- Heavy landslides. Especially when involving debris flows (a mixture of water, rock, soil, and vegetation), landslides can crush and bury homes.
Cities at most risk of being affected by heavy landslides are located in areas with steep slopes, unstable geology, and heavy rainfall.
Examples: Los Angeles, Hong Kong, Rio de Janeiro
- Floods. Prosperous areas can face a variety of flood risks, including overbank flooding from rivers and urban flooding caused by heavy rainfall overwhelming drainage infrastructure.
Examples: London, New York City, Amsterdam
Where to Disaster-Proof a Collection, According to Research
While the 2024 World Risk Report and older – yet valid, as meteorological and geological patterns are relatively stable – research from insurer Swiss Re address the global risks of natural disasters, such information will likely be an imperfect tool for UHWNIs aiming to disaster-proof their collections.
The World Risk Report tends to focus on countries as opposed to cities. This approach is effective for smaller countries, but whether it is effective for larger countries like the United States – where risk profiles differ significantly from the east to west coasts – is questionable.
Swiss Re’s research takes a rather more city-centric approach but also focuses on rather broad factors like productivity losses due to employees being out of the office. While such things do matter to UHNWIs and everyone else with a stake in a given economy, the research tends not to parse out issues like damage to collectibles owned by an area’s wealthiest residents.
Despite its shortcomings, this research can lead UHNWIs to make some broad conclusions:
- Western, Central, and Southern Europe are among the safest places to safeguard collections from natural disasters. According to the 2024 World Risk Report, Monaco was the state least likely to be severely impacted by force majeure. Andorra, San Marino, and Luxembourg followed next in the ranking. Eleven of the 15 safest states were located in Western, Central, and Southern Europe, including Switzerland, Malta, and Denmark. Two states from the Northeastern Arabian Peninsula, Qatar and Bahrain, also ranked highly at #8 and #9, respectively.
- Japan as well as Los Angeles and Amsterdam are among the places in which collections are at most risk of being lost to natural disasters. According to Swiss Re’s analysis, Tokyo and Nagoya ranked among the top 10 riskiest cities worldwide across all three dimensions of risk they assessed (related mainly to societal and economic impact). Los Angeles, Amsterdam, and Osaka also appeared in the top 10 for two of these dimensions.
Comparing all of the information presented so far in this article with research from Henley & Partners on millionaires’ favorite places to live, Paris, Milan, Frankfurt, and Geneva might be ideal cities in Europe for keeping collections. Geneva seems to be particularly appealing; it was the city in mainland Europe that saw the highest rise (+36%) in the population of millionaires from 2013 – 2023.
Keeping Track of Collections with Altoo
Wherever collectibles are kept, the Altoo Wealth Platform can help their owners keep track of them and the items’ current values. The Altoo Wealth Platform is an advanced digital solution that consolidates, analyses, and visualises data on all the diverse holdings typically present in UHNWIs’ portfolios, both bankable and non-bankable. For UHNWIs managing extensive collections across various – hopefully disaster-safe – locations the platform’s gallery view helps maintain a comprehensive inventory, including item location and current valuation. Valuations, insurance policies, and other important digital documents connected to individual items can be attached to each item’s record for easy, logical access.
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