Online tool helps risk managers deal with supply chain risk

The 2014 FM Global Resilience Index is an online, data-driven tool and repository ranking the business resilience of countries.

In addition to the results above, the index shows that China’s three regions (divided for the index because the geographic spread of the country produces significantly disparate exposures to natural hazards) rank 61st, 66th and 75th.

China’s weakest grouping, which includes Shanghai, ranks particularly low as a result of poor risk quality due to acute natural hazards.

Executive vice president of FM Global Jonathan Hall (pictured) told StrategicRISK that the index could help risk professionals to understand the unknown supply chain risk and resilience factors inherent in a country where they, their suppliers or customers operated.

“In turn, that can help risk managers make even more informed business decisions and deliver a strong case to senior management with the tool and data at their fingertips.” he said.

Singapore

The index reveals that Singapore has a relatively high resilience score of 74. Of the three core factors underpinning the index – economic, risk quality and supply chain – Singapore scores particularly strongly on supply chain factors, ranking 11th worldwide and beaten only by Japan and Hong Kong in the Asia-Pacific region.

Singapore ranks second in the world for its infrastructure, equal with Hong Kong, and also ranks in the top 10 in the world on the following dimensions: quality of natural hazard risk management (third), political risk (fourth), control of corruption (seventh), quality of fire risk management (10th), and GDP per capita (10th).

The weakest driver of supply chain risk in Singapore is oil intensity, suggesting that the country is vulnerable to a sudden disruption in the oil supply or a sudden change in oil price. On this driver, Singapore ranks 126th.

Thailand

Thailand sits just above the mid-point of the worldwide ranking, coming 21st for risk quality and scoring above average on all three risk quality drivers: exposure to natural hazard, and quality of both natural hazard risk management and fire risk management.

However, Thailand scores relatively poorly on the economic factor, ranking 123rd due to supply chain vulnerability to both political risk and sudden disruption to the oil supply.

Vietnam

Vietnam ranks 100th in the index, demonstrating a vulnerability to supply chain disruption. It scores below average for seven of the nine drivers of supply chain risk that underpin the index. It is only as regards political risk and the quality of fire risk management that Vietnam ranks in the top half of the index.

FM Global commissioned analytics and advisory firm Oxford Metrica to develop the rankings. 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.

Hall said that natural disasters, political unrest and a lack of global uniformity in safety codes and standards all had an impact on business continuity, competitiveness and reputation.

“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,” he said.

“The resilience index is a dynamic resource to better understand unknown risk in order to strategically prioritise supply chain risk management and investment efforts.”

FM Global Resilience Index is available at www.fmglobal.com/resilienceindex