Which countries are most resilient to global supply chain challenges?

By Tom Wadlow
Cyber attacks, natural hazards and supply chain failure have been cited as the three most pressing risks to business performance. The 2017 FM Global Re...

Cyber attacks, natural hazards and supply chain failure have been cited as the three most pressing risks to business performance.

The 2017 FM Global Resilience Index, which is online and interactive, ranks 130 countries and territories by their enterprise resilience to disruptive events such as cyber attacks and natural disasters. Now in its fourth year, the index aims to help business executives site facilities, select suppliers, evaluate established supply chains and identify customers who may be vulnerable.

For companies concerned by the increasing incidence of cyber attack, oil-rich Saudi Arabia has emerged as a country with above-average inherent cyber risk. Its high internet penetration, combined with a limited cyber security industry, make it a more vulnerable target. Developing India, by contrast, with its growing information technology industry, emerges as a country with below-average inherent cyber risk.

On the issue of natural disasters, Sweden has above-average resilience due, in part, to its lower-than-average exposure to hazards such as windstorms, flood and earthquakes. On the other hand, flood-prone Bangladesh, a major manufacturing hub for apparel and textiles, ranks toward the bottom of the index.

For companies with global supply chains, Germany, a major exporter and importer, ranks near the top in resilience, driven in part by its strong ability to demonstrate where parts, components or products are in transit. Russia ranks below average in this respect.

Users of the index can now investigate 12 quantified resilience drivers related to each country’s economic strength, risk quality and supply chain condition.

The index also ranks countries in overall enterprise resilience. Wealthy Switzerland occupies the number-one ranking, reflecting high scores for its infrastructure, local supplier quality, political stability, control of corruption and economic productivity. Hurricane-ravaged Haiti ranks at the bottom of the index due in part to its high natural hazard exposure and poor economic conditions.

Many of the insights above originate from three new resilience drivers added to the index this year:

  1. Inherent cyber risk – Reflects a country’s vulnerability to a cyber attack and its ability to recover.
  2. Urbanisation rate – Serves as a proxy for stress (on water supplies, power grids and other infrastructure) that would be exacerbated by natural disasters such as windstorms, flood and earthquakes.
  3. Supply chain visibility – Reflects the ability to track and trace consignments across a country’s supply chain.

Other drivers of resilience that form the index include: productivity, political risk, oil intensity, exposure to natural hazard, natural hazard risk quality, fire risk quality, control of corruption, quality of infrastructure and quality of local suppliers.

“Our clients have found the index valuable when making important decisions about their properties, business strategies and supply chains,” said Bret Ahnell, executive vice president at FM Global, one of the world’s largest commercial property insurers. “We upgraded the index this year to reflect escalating threats that can make a lasting impact on business performance. FM Global will continue to improve the index and make the data publicly available to any business, client or not.”

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