Riskiest Countries for Business: FM Global Ranks Nations by Supply Chain Resilience
June 11, 2014 - SCMR Editorial
The 2014 FM Global Resilience Index released today finds Norway, Switzerland and Canada top the list of nations most resilient to supply chain disruption, one of the leading causes of business volatility. The first-of-its-kind Index, commissioned by FM Global, one of the world’s largest commercial property insurers, is an online, data-driven tool and repository ranking the business resilience of 130 countries. More than a year in development, the Index is designed to help executives better assess and manage supply chain risk. The Index finds Kyrgyzstan, Venezuela and the Dominican Republic as nations least resilient to supply chain disruption.
“Natural disasters, political unrest and a lack of global uniformity in safety codes and standards all can have an impact on business continuity, competitiveness and reputation,” said Jonathan Hall, executive vice president, FM Global. “As supply chains become more global, complex and interdependent, it is essential for decision makers to have concrete facts and intelligence about where their facilities and their suppliers’ facilities are located.
In an interview with SCMR, Hall noted that the 2014 Resilience Index reveals “surprising” resilience rankings for some leading economies with apparently strong supply chains.
“Both Hungary, which ranked 51st out of 130 countries we evaluated, and South Korea, which ranked 69th, have strong scores on economic factors but are dragged down by their risk quality scores. The risk quality drivers of the index reveal a country’s exposure to natural hazard, quality of natural hazard risk management and quality of fire risk management,” he said. “Conversely, Botswana ranks 37th in the world for its resilience to supply chain disruption, owing to its political stability, and placing it ahead of Brazil and Mexico. Likewise, Norway may not have been on the radar screen of many companies, but perhaps it should be because it leads the index of country’s most business resilient to supply chain disruption.”
2014 key findings:
*The United States and China are each divided into three separate regions because the geographic spread of these countries produces significantly disparate exposures to natural hazards. All three regions of the U.S. rank in the top 25 and China’s regions rank 61, 66 and 75. China’s weakest grouping, which includes Shanghai, ranks particularly low as a result of poor risk quality due to acute natural hazards.
*The biggest riser since 2013 is Bosnia and Herzegovina, climbing 19 places due to improvements in the country’s political risk and in the quality of local suppliers.
*Bangladesh is one of the top fallers due to declining quality of both natural hazard risk management and fire risk management.
FM Global commissioned analytics and advisory firm Oxford Metrica to develop the rankings with the aim of bolstering intelligent dialogue around building resilience and avoiding supply chain disruption.
The data comes from a combination of independent third-party sources and FM Global’s RiskMark benchmarking algorithm, which measures the risk quality of more than 100,000 insured commercial properties worldwide. The inaugural index allows for browsing of countries’ rankings and scores from 2011 to 2014, to reflect both improvements and declines in individual countries’ relative rankings.
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