Supply chains are facing a number of threats such as depressed oil prices, natural catastrophes and the spread of terrorism. These and other threats are reflected in the 2016 FM Global Resilience Index, which ranks 130 countries and territories according to nine drivers that can affect the vulnerability of a business in those regions.
“Resilient supply chains give businesses a distinct advantage by protecting their operational integrity, revenue stream, market share and shareholder value,” says Bret Ahnell, executive vice president at FM Global. “A fragile supply chain, on the other hand, often harms the company involved, sometimes for the long term.”
Denmark’s particular strengths lie in its control of corruption, where the country ranks second in the world, in its resistance to oil shock (ranked 6), the quality of its local suppliers (ranked 7) and its economic productivity (ranked 10).
Australia returns to the top 10 after a year’s absence, and scores in the top 10 countries in the world with respect to both the economic and risk quality factors. In a similar profile to Norway, Australia scores well as regards to both its economic productivity (ranked 9) and in its control of corruption (ranked 10).
Canada ranks 8th out of 130 countries and territories in the 2016 FM Global Resilience Index, for its resilience to supply chain disruption – one of the leading causes of business volatility.
Of the three core supply chain resilience factors underpinning the Index – economic, risk quality and supply chain, Canada’s strongest factor is risk quality, where the country ranks 2nd in the world. This strength is driven by below average exposure to natural hazards and above average quality of fire risk management. Canada also ranks strongly on economic factors where it places 19th in the world, and supply chain factors where it places 21st. Like the U.S., Canada’s overall results are pulled down by its vulnerability to an oil shock given the country’s high oil consumption relative to its GDP, which places the country 77th worldwide.
7. US - Region Three
Port of Houston
US Region 3 is the central region of the US that is subject to a variety of natural hazards, but with less exposure than states in the east or west of the country
With low levels of political risk, corruption and natural hazards exposure and high perceptions of its infrastructure and local supplier quality, the Netherlands ranks 6th out of 130 countries and territories in the 2016 FM Global Resilience Index. Pulling its standings down slightly is the country’s vulnerability to an oil shock given high oil consumption relative to its GDP, which yields the country a ranking of 69th globally on this dimension of resilience.
Additionally, the country’s commitment to fire risk improvement, given the inherent fire risk exposure in the Netherlands, has room for improvement, likely stemming from the fact that automatic fire sprinklers, the most effective method of preventing and minimizing fire risk, are not as commonly found in as many of the nation’s commercial and industrial facilities.
Luxembourg ranks 8th out of 130 countries and territories in the 2016 FM Global Resilience Index. It ranks tops worldwide for the economic factor and 11th for the supply chain factor.
The country likely would rank even higher in the FM Global Resilience Index if it were not for its rank at 79th in the world for risk quality driven by its below average quality of fire risk management where the country ranks 74th worldwide and its exposure to natural hazard where the country ranks 76th.
Port of Hamburg
Germany ranks 4th in the world in the 2016 FM Global Resilience Index, up two positions this year.
Of the three core factors underpinning the Index – Economic, Risk quality and Supply chain – Germany scores particularly strongly on Supply chain factors, ranking 4th worldwide attributable to perceptions of high quality local suppliers, and beaten only by Switzerland, Japan and the Netherlands.
Germany potentially has the opportunity to rise even further in the Index by addressing a poorer quality of fire risk management, given the country’s inherent fire risk exposure, which places the nation 43rd in the world in that regard.
To the country’s credit, Ireland has continued to steadily climb up the FM Global Resilience Index rankings since 2013, for its resilience to supply chain disruption – one of the leading causes of business volatility.
Currently the country ranks 3rd out of 130 countries and territories indexed. Contributing strongly to Ireland’s position is that its commercial and industrial facilities have the lowest exposure worldwide to natural hazards, and its high quality of risk management across both natural hazards and fire risk, given the inherent risk exposure. In addition, Ireland has a very low vulnerability to oil shock, its economy not being heavily dependent on oil consumption.
Norway, ranked 2 in the index, achieves particularly high scores for its control of corruption, where the country ranks third, and for its economic productivity, where the country ranks fourth.
Switzerland ranks top for the supply chain factor, including ranking first for an extensive and efficient infrastructure, and second for the perceived quality of its local suppliers.
Switzerland ranks second in the world for the economic factor, including ranking second for both its economic productivity - captured by gross domestic product (GDP) per capita - and its oil intensity. Oil intensity captures a country’s vulnerability to an oil shock, such as a sudden shortage, disruption or price hike, and is defined as oil consumption divided by GDP.