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Cyber attack and natural disasters join supply chain failure as the leading three emerging risks for business in a resilience index produced by insurer FM Global. Natasha Turak reports.

Mutual insurance company FM Global’s recently released 2017 Resilience Index has highlighted the emergence of three of the most pressing threats to business performance as cyber attack, natural hazards and supply chain failure. In line with this finding, the firm has added new metrics to its ranking tool: cyber risk, urbanisation rate and supply chain visibility.

Focused on property risk management, the resilience index lists 130 countries and territories by their enterprise resilience to disruptive events. Currently in its fourth year, it is designed to help business executives choose site facilities, select suppliers, evaluate supply chains and identify vulnerability.   

The country named most vulnerable to inherent cyber risk is Saudi Arabia, followed by Bahrain, the United Arab Emirates and Qatar. FM Global’s calculation “combines equally a country’s vulnerability to cyber attack with the country’s ability to recover from such an attack”, noting that countries with high levels of internet penetration and simultaneously low civil liberties experience the most risk in this area.

Rapid urbanisation has played a growing role in enterprises’ vulnerability because it multiplies the effects of natural disasters such as floods. Bangladesh, Thailand, Vietnam and China all face the dual challenges of flood or earthquake exposure and high urbanisation rates, meaning their globally important manufacturing supply chains are highly susceptible to disruption.

Sweden, by contrast, ranks above average for resilience in this regard, with low exposure to hazards paired with highly developed infrastructure and safety regulations.

Supply chain visibility, as described by the index, “reflects the ability to track and trace consignments across a country’s supply chain”. Ranked highest in this area is Germany, while Russia rates “below average”. 

This year’s index ranked Switzerland and Luxembourg in first and second place, respectively, while Haiti placed last out of 130 countries, preceded by Venezuela.

The index described Switzerland’s infrastructure, local suppliers, political stability, control of corruption and economic productivity as among the best in the world, and cited Luxembourg’s reduced reliance on oil for economic productivity as part of its rise from eighth place on the list in 2013 to second in 2017.

“We upgraded the index this year to reflect escalating threats that can make a lasting impact on business performance,” says FM Global executive vice president Bret Ahnell.

Other criteria the index analyses are: 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.

This article is sourced from fDi Magazine
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