The annual index, published today by FM Global, one of the world’s largest commercial property insurers, is the definitive ranking of nearly 130 countries by the resilience of their business environments. It provides companies with objective information about countries’ economic, risk quality and supply chain resilience – factors that create a springboard for businesses working to recover from the pandemic.
“Especially after a crisis like COVID-19, resilience is critical for people, countries and businesses,” said Kevin Ingram, executive vice president and chief financial officer (CFO) of FM Global. “A country’s ranking in the 2020 FM Global Resilience Index is a good indication of how its business environment will fare and how quickly organizations there might rebound after taking the economic blow of the coronavirus. These are critical insights for businesses making far-reaching choices as they build facilities, extend supply chains and cultivate new markets.”
In addition to outlining the post-pandemic business landscape, the FM Global Resilience Index stands as a dynamic reminder that conventional business risks – hurricanes, flood, drought, fire, earthquakes, cyber attack, oil shocks and political upheaval – continue to threaten operations and overall value. That’s worth remembering on the eve of an Atlantic hurricane season projected to see above-normal activity.
“A unique event like a contagious viral disease unfortunately does not preclude other terrible events,” said Ingram. “Only diligent, rational risk-and-resilience analysis and loss prevention is sufficient for preserving a company’s value through chaos.”
Top, bottom, risers, fallers
The index’s top-ranked regions (in descending order) are Norway, Switzerland, Denmark, Germany, Sweden, Finland, Luxembourg, Austria, Central United States and Eastern United States (both the U.S. and China comprise three regions with differing natural hazard exposure).
Norway occupies the top spot for the second year in a row, supported by strong economic productivity, a stable political environment, low corruption, high natural hazard risk quality and robust corporate governance.
The bottom 10 (in descending order) are Nicaragua, Nepal, Mali, Mozambique, Iran, Lebanon, Chad, Ethiopia, Venezuela and Haiti.
A major riser in this year’s index is Taiwan, which climbed 14 places to 29th place based on improvements in its urbanization rate, natural hazard risk quality, and quality of its transport and utility infrastructure. Taiwan’s urbanization rate – one of 12 index drivers – improved dramatically, moving the country up 42 places in that metric (the lower the rate, the lower the stress on infrastructure and the higher the resilience rank). The biggest faller in the index is the Dominican Republic, which fell 19 places to 90th place due to increases in its urbanization rate and cyber risk.
How to use the index
Index data like this is designed to help CFOs and other business leaders make prudent business decisions as they site facilities, extend supply chains and cultivate customers. A lack of business resilience can result in long-lasting effects on market share, growth opportunities and investor confidence – all contributors to business value.
“Resilience is ultimately a product of the choices businesses make, including where they do business and how they invest in each location,” said Sanjay Chawla, chief investment officer at FM Global. “The Resilience Index is designed to make these choices clearer as executives weigh the regular strategic reasons – logistics, labor force and market opportunity – for selecting particular geographies.”
About FM Global
Established nearly 200 years ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organizations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.