Europe contains several of the top 10 countries in the world when it comes to strength of business supply chains.
Supply chain resilience is vital to robust business performance. Threats to resilience -such as depressed oil prices, natural catastrophes and the spread of terrorism - are keeping financial executives around the world up at night.
These and other threats are reflected in the 2016 FM Global Resilience Index, the definitive global ranking of countries’ business resilience to supply chain disruption. FM Global is one of the world’s largest commercial property insurers. The Index ranks 130 countries and territories according to nine drivers that can affect the vulnerability of a business in those regions.
Declining oil prices are at the root of Norway’s drop to second place in the third annual release of the Index. The oil producer was replaced by Switzerland, which was ranked second last year. Oil-rich
Political risk, one of the nine Index drivers, can be a severe constraint on business resilience. A significant and topical component of political risk is terrorism. Already in 2016, there have been deadly acts of terrorism in such countries as Pakistan (ranked 117), Belgium (ranked 17), Côte d’Ivoire (ranked 58), Nigeria (ranked 116) and Turkey (ranked 79). The threat of terrorism is real and unabated.
For the second consecutive year, Ukraine (ranked 125, down from 107) was among those countries with the biggest drop, reflecting the high degree of tension within the country as well as with Russia (ranked 75).
The so-called Brexit debate, over whether the United Kingdom (UK) (ranked 20) should leave the European Union (EU), could impact the country’s future ranking in the Resilience Index. For those wishing the UK to remain in the EU, a vote for the country to leave could represent a significant risk to the UK’s productivity and growth prospects. Should that result, the Index drivers affected by GDP (i.e., ‘GDP per capita’ and ‘oil intensity’) could be adversely swayed.
“By giving executives easy access to authoritative information on factors that could disrupt their supply chains, the FM Global Resilience Index provides a simple way to analyse the potential for business risk and drive better decisions,” said Bret Ahnell, executive vice president at FM Global. “Resilient supply chains give businesses a distinct advantage by protecting their operational integrity, revenue stream, market share and shareholder value. A fragile supply chain, on the other hand, often harms the company involved, sometimes for the long term.”
Top- and Bottom-Ranked Nations
Formerly ranked number two, Switzerland has traded places with Norway, reflecting the latter’s drop in oil revenue at a time of falling crude oil prices. Rounding out the top 10 in the Index, in descending order, are Ireland, Germany, Luxembourg, Netherlands, the central United States, Canada, Australia and Denmark.
The lowest-ranked country in 2016 is Venezuela (ranked 130) for the second year in a row, followed in ascending order by the Dominican Republic, Kyrgyz Republic, Nicaragua, Mauritania, Ukraine, Egypt, Algeria, Jamaica and Honduras.
The top 10 countries are: