Norway tops annual FM Global Resilience Index of 130 nations’ business climates

Global Risk Management Solutions (GRMS)

The mutual insurance firm FM Global this week released its 2019 Resilience Index, examining economic indicators, risk factors and supply chain issues in 130 countries around the world — ranking the nations by the resilience of their business environments.

The index is meant to be a tool for senior executives to conduct “vulnerability assessments and build their companies’ resilience around the world,” according to FM Global, which focuses on property loss issues.

Norway topped the list, and Haiti came in last. The U.S. and other large nations are divided into zones based primarily on the severity of natural disaster risks and local political factors.

The U.S. central zone (roughly the Southwest up to Idaho and across to the mid-Atlantic states) ranks No. 9. The U.S.’s east zone (The East Coast, the South and Texas) ranks 11th. And the west zone of the U.S. (Alaska, the West Coast states and a few others) ranks 22nd.

China’s zone 1 (eastern coastal areas) ranked 74th. Its zone 2 (a northern area, an east-coast district and a southern area) ranked 76th. And China’s zone 3 (the bulk of the nation’s interior) ranked 68th.

Russia ranked 54th.

Venezuela’s political turmoil, runaway inflation and deep dependence on oil to sustain its economy contributed to a 129th ranking.

“Resilience is critical for CFOs as trade conflicts, weakening economies, national elections, Brexit and evolving climate risks prompt companies to rethink their locations and partners,” FM Global Executive Vice President and Chief Financial Officer Kevin Ingram said. “We believe resilience is a choice that industry leaders make, and the Index gives executives one more tool with which to make good decisions about their futures.”

The index also added a corporate governance ranking, with Singapore claiming the top position in the new category, which looks at a country’s conflict-of-interest regulation, shareholder governance policies, and its auditing and accounting standards. In the overall index, the small but important “city-state” of Singapore ranked 21st.

Sometimes referred to as the “Singapore of Africa,” Rwanda claimed the highest rank for corporate governance on the African continent and 29th worldwide, helping propel the small nation to 72nd overall from 107th in 2018 — the single largest jump for any nation in the Index.

Thailand also saw substantial gains between 2018 and 2019 thanks to improved supply chain visibility and corporate governance but retains a below-average overall ranking of 73 due to persistent risks from extreme weather.

The FM Global Resilience Index uses 12 equally weighted variables (see chart below), measured through independent research and using data from client partners from some of the world’s leading corporations, including one in three Fortune 1000 companies.

Nordic and central European countries crowded the top of the 2019 Index, with Norway replacing Switzerland in the leading position, owing to a low exposure to natural disaster risk and a continuing reduction of the nation’s reliance on oil in its economy. The remaining nations in the top 10, in descending order, were Denmark, Switzerland, Germany, Finland, Sweden, Luxembourg, Austria, the Central United States and the United Kingdom at No. 10, even with its Brexit uncertainty.

Cybersecurity risks continue to hamper nations and corporations alike even as powerful countries around the world work to shore up their defenses. Germany, France, Australia and the United States gained significant ground, rising to ranks of 54th, 89th, 62nd, and 32nd respectively in the cybersecurity category.

While the improvements are encouraging, the rankings also indicate the need to keep up the pressure in mitigating these technological risks that still fall short of high-ranking nations like Italy and India.

Already in 2019, the U.S. alone has seen a series of major data breaches from corporate movers like Facebook (owner of WhatsApp) and a series of cybersecurity firms underscores the need for vigilance and the risks even to those expected to be most prepared and secure.

The bottom of the Resilience Index represents countries where doing business carries the highest risks.

Haiti, one of the world’s poorest countries, is still struggling to recover from the 2016 Hurricane Matthew while grappling with a persistent fuel shortage. It claimed the lowest rank, last out of 130 countries indexed.

In spite of recent reform efforts and more normalized and peaceful relations with neighboring Eritrea, Ethiopia found itself third to last in 128th position. The East African nation began to increase the impact of oil on their economy when crude production began last year, and has for years struggled with food instability from unpredictable farming seasons and high inflation.

El Salvador dropped from 103rd to 117th since 2018.

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