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FM Global’s 2021 Resilience Index shows shift in top country, Hong Kong growing less resilient, Ukraine improving

06/22/2021 By

Mutual insurance firm FM Global has released its 2021 Resilience Index, a tool meant for senior executives to assess the resilience of 130 countries around the world to make decisions about risk factors and global supply chain planning.

In developing the Resilience Index, FM Global uses 12 objective measures like risk from natural disasters, oil usage and economic productivity to rank countries or economic regions on the resilience of their economic environments.

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“Over the years, leanness, speed and short-term profit have often reigned as primary concerns of global businesses,” said Eric Jones, FM Global’s Vice President, Global Manager of Business Risk Consulting. “But the historic events of 2020 reminded the world that these qualities are subordinate to the ability to resist, rebound from or operate through lockdowns, demonstrations and climate-related disruptions. Resilience has always affected a company’s total value, and this past year’s events brought this imperative into sharp relief.”

New to the No. 1 ranking this year is Denmark, moving up from the third spot based on improvements in economic activity and intensity of oil usage.

FM Global said pandemic risk is not explicitly measured in the index, but it believes that the resilience of a country’s business environment is a reliable platform for businesses trying to rebound from the impact of a pandemic. The index mainly focuses on other key areas (seen in the graphic below):

(Click image to enlarge)

Outside of Europe, only a single region — the central United States — ranked among the top 10 regions for business resilience (some countries, like the US and China, are aggregated into regions for this index). Norway moved down a spot to the second-place ranking, while Luxembourg was ranked third overall.

In the European region, the UK was another riser, taking a spot in the top 10 based in part on a successful Brexit transition and a calmer political climate overall.

Despite simmering tensions along the Russian border, Ukraine was the biggest gainer in the 2021 Resilience Index, rising from 84th to 63rd based on improvements in productivity and risk of cyberattacks, as well as declines in oil intensity and overall corruption.

The largest drop came from Oman, moving from 57th to 69th due to falling economic productivity and an uptick in oil intensity.

In China, the densely populated eastern coastal region saw the greatest decline, falling from increased oil intensity and an increase in corruption.

In Asia, Hong Kong saw its ranking drop from 19th to 26th, as political tensions with mainland China continued to rise. A vigil for victims of Chinese political violence was recently blocked by authorities, with hundreds of Hong Kong citizens still turning out despite the ban.

Mexico’s ranking also fell as a result of growing political and cybersecurity risks from 67th to 75th, where dozens of politicians and political candidates have been killed in the lead-up to national elections. Mexico saw the second-largest drop in overall ranking after China’s eastern coastal region.

Both the western region of China and the Eastern region of the United States saw lower rankings compared to last year, based on new earthquake data analyzed by FM Global. China’s region 3 fell from 65th to 71st, while US region 1 fell from 10th place to 17th overall. Based on the same new earthquake data, Singapore’s ranking increased from 22nd to 12th, the second largest gain of any nation. The US region 3 (the Western area) stayed at 23rd.

Climate change measures continue to grow as important considerations in the FM Global Resilience Index. Natural hazard exposure measures risks from events like floods and severe weather from climate change, while natural hazard risk quality examines countries’ efforts to mitigate the actual and anticipated impacts of climate change on their economies. Urbanization rate is also measured when assessing climate risk, with greater damage and cost anticipated for more urbanized regions that fall victim to natural disasters.

Iran helped round out the bottom of the Resilience Index for the first time, falling to 128th due to large drops in economic productivity and increased political risk. Venezuela was second to last, and Haiti took the bottom spot as the least resilient region for doing business.

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