By Deborah Ritchie
The nations most resilient to supply chain disruption, one of the leading causes of business volatility, have been revealed by an index developed by FM Global. More than a year in development, the data-driven tool and repository ranks the business resilience of 130 countries via an online, interactive tool that displays data on country-by-country susceptibility to supply chain disruption. The 2014 FM Global Resilience Index finds Norway, Switzerland and Canada top the list of nations most resilient to supply chain disruption. At the other end of the scale, Kyrgyzstan, Venezuela and the Dominican Republic were found to be the least resilient.
“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. The Resilience Index is a dynamic resource to better understand unknown risk in order to strategically prioritise supply chain risk management and investment efforts.”
The United Kingdom ranks 20th in the 2014 FM Global Resilience Index with a score of 76. Where the UK scores particularly strongly, ranking 8th worldwide, is in its resilience to an oil shock, be it a sudden disruption in the price or supply of oil. The UK’s consumption of oil, relative to GDP, is relatively low. This gives rise to a good score for oil intensity, helping to drive the UK up the rankings. The UK also makes it into the top 20 worldwide in its control of corruption. Where there is particular scope for improvement in the UK is in the quality of risk management against natural hazards and fire risk. In both dimensions, the UK achieves an average score in global terms. Political risk also is dampening the result for the UK, reflecting a continuing perceived threat of terrorism, although this perception has improved steadily during the last four years.
•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.
“We live in a volatile world and whether that’s because of what nature wrought or the human element, every nation is prone to some form of risk,” said Margareta Wahlström, United Nations Special Representative of the Secretary-General (SRSG) for Disaster Risk Reduction.
“The question is why are some countries, whether developing nations or economic power houses, more resistant to supply chain disruption or better able to bounce back? It’s a puzzle that world leaders are perpetually trying to solve and there’s endless value inherent in a tool like the FM Global Resilience Index to help answer that.”