FM Global launches 2020 update to Resilience Index

Resilience is never more critical than in a world shocked by pandemic, with top-ranked Asian countries and territories in the 2020 FM Global Resilience Index including Hong Kong, Singapore, Japan, Taiwan and South Korea, demonstrating they have the foundations in place for a robust rebound.

The annual index, published by FM Global, 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.

In addition to outlining the post-pandemic business landscape, the FM Global Resilience Index stands as a dynamic reminder that conventional business risks – flood, cyberattack, fire, hurricanes, earthquakes, oil shocks and political upheaval – continue to threaten operations and overall value. 

Among the index’s 12 economic, risk and supply chain-related measures of resilience that underpin a country’s overall ranking, no Asian country ranked inside the top 30 for their ‘natural hazard risk quality’ – a measure of the quality and enforcement of a country’s building codes with respect to natural hazard-resistance combined with the level of risk improvement achieved.

For natural hazard risk quality, Japan (ranked 32), Singapore (ranked 33), Taiwan (ranked 35) and Hong Kong (ranked 40) stand strongly in contrast to China Regions 1, 2 and 3 (ranked 91),[1] Cambodia, Sri Lanka, Laos, and Nepal (all tied at 97) and Vietnam (ranked last at 130).

Within the index, a number of Asian countries fell in 2020 in regards to ‘inherent cyber risk’ including Taiwan (from 45 to 93), Hong Kong (from 72 to 97) and Vietnam (from 103 to 116) reflecting the evolving cyber threat landscape that continues to be a board level concern and can challenge the resilience of many businesses across Asia as internet penetration increases.

“As we look ahead to post-COVID-19 recovery, resilience takes on new meaning for many businesses across Asia. The 2020 FM Global Resilience Index demonstrates that attention must still be paid to ever-present and traditional business risks, such as natural disaster and cyber security,” said Alex Tadmoury, senior vice president, division manager of FM Global’s Asia Pacific operations.

“These remain obstacles for many countries across Asia, heightened by new challenges created by the pandemic. Those that endure most successfully will be those who invest in thorough risk-and-resilience analysis and timely loss prevention measures,” he added.

Top, bottom, risers, fallers

Overall, many countries across Asia remained stable compared to previous years. Notably, a major riser in this year’s index is Taiwan which climbed 6 places to 29^th based on improvements in its natural hazard risk quality and quality of its infrastructure. Taiwan also has demonstrated its resilience, seeing success in containment of COVID-19.

China significantly improved for corporate governance from last year’s ranking (from 98 to 74), indicating greater scrutiny of auditing and accounting standards, conflict of interest regulation and shareholder governance.

Overall, the index’s top-ranked regions (in descending order) are Norway, Switzerland, Demark, Germany, Sweden, Finland, Luxembourg, Austria, Central United States and Eastern United States (both the US and China comprise three regions with differing natural hazard exposure).

Norway occupies the top spot again this year, 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 faller in the index is Nicaragua which fell 9 places to 121^st place due to increases in cyber risk and political risk as well as decreased control of corruption.

How to use the index

Index data like this is designed to help chief financial officers (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 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.”