There is general unease about the state of the global economy with its increase in operational risk and the Chinese slowdown highlighting emerging market vulnerabilities.
This is according to the latest Chartered Institute of Procurement & Supply (CIPS) Risk Index, powered by Dun & Bradstreet, which found global supply chain risk increased in the fourth quarter of 2015, resuming the worsening trend in global operational risk.
"The fourth quarter of 2015 was dominated by non-economic news, such as the Paris terror attacks and the continued refugee inflows into Europe, combined with the increased political resistance and sometimes controversial measures aimed at curtailing these inflows,” explained Oana Aristide, acting global leader at Dun & Bradstreet.
“While both of these have a limited impact in terms of disrupting business activity, they do affect investor and consumer confidence,” Aristide added. “Meanwhile, the Federal Reserve lift-off and growth deceleration in China raised concerns about emerging markets' vulnerabilities. The business uncertainty – a feature of the global economy since the end of the recession – continues to stifle consumer confidence, which is necessary for a robust global recovery."
To determine the CIPS Risk Index,132 countries across nine risk and opportunity categories were analyzed. The index score worsened slightly in the last quarter of 2015 to 79.3 from 79.1 in the third quarter of 2015. While some regions, including the EU, have improved since mid-2015, emerging markets now demonstrate more vulnerability.
Key highlights from the index include:
- Supply chain risk in Asia Pacific continued to rise due to worsening economic conditions in New Zealand,Australia and China.
- Sub-Saharan Africa's supply chain risks fell slightly, though underlying risk trend continues to deteriorate.
- Though Iran's re-entry into global supply chains encourages optimism, supply chain risk in the Middle Eastand North Africa (MENA) remains in the high risk category.