The FM Global Resilience Index was developed as a tool to rank the resilience of 130 countries to supply chain disruption and vulnerability. The index looks to evaluate the factors of resilience and group them into three categories or core resilience factors – economic, risk quality and supply chain factors.
The FM Global Resilience Index provides a means for companies to conduct research into the various risks in countries that they trade in as well as providing insight about the opportunities available.
So, which countries have the least resilient supply chains?
Egypt has a diversified economy which has been in a state of uncertainty since the Egyptian revolution in 2011. That coupled with the recent terrorist incidents means that the country is considered to be at a high threat from terrorism. A once favourite place for holidays as well as trade is now considered amongst the world’s danger zones and certain areas in the country should be avoided.
Honduras unfortunately ranks due to its geographical location as the country is particularly prone to floods and storms. The country is also ill-equipped to tackle damage caused by natural disasters. This combined with the country’s reputation for having corruption in the supply chain means that dealing with companies in Honduras is a risky prospect.
Like Honduras, Jamaica is situated in a dangerous geographical area and has been placed in the World Bank’s Natural Disaster Hotspots Report as the country with the third greatest exposure to multiple hazards in the world. It was found that (www.wireddja.com) 87% of the country’s Gross Domestic Product (GDP) was at risk from disasters with the same percentage of population living in areas at risk from three or more hazards.
Algeria is a country that is hugely affected by lowering oil prices and political unrest. Any increases in political risk makes a country become a heightened supply chain risk which largely explains why Algeria is considered least resilient (along with Ukraine and Egypt) in supply chain management.
Ukraine provides a trade route and oil pipeline between Europe and Russia but since they are in conflict with Russia it poses challenges to companies who want to expand their supply chains here. The country is considered to have weakened political stability and a poor infrastructure network. Companies with a reliance on Ukraine are going to be continually affected by the uncertainties within the country. (www.theguardian.com).
As stated previously, the familiar reason of lowering oil prices and terrorism has hit some countries hard and Mauritania in Africa is no exception. Mauritania is the highest risk African country. The country is considered at high risk from terrorism including kidnapping and there are often political clashes, making the economy unstable.
The Kyrgz Republic is considered a corrupt country to deal with and is known for its two revolutions that have taken place in the last 10 years. The country is also has weak public institutions, a corrupt government, criminal establishments and political instability (www.geopoliticalmonitor.com), so is considered an area to avoid.
It is felt that the Dominican Republic is corrupt and therefore robust risk management is required when implementing supply chain management in the country. The country not only ranks poorly for corruption but also terrorism, human rights and political uncertainty. The Foreign & Commonwealth Office have created a guide on Overseas Business Risk in the Dominican Republic which can be viewed here: www.gov.uk. It certainly makes interesting reading for businesses wanting to trade there.
Venezuela has a poor infrastructure and high levels of corruption. It is also experiencing hyperinflation and the International Monetary Fund believes that inflation will increase by 481% this year www.profitpt.com. The country’s poor economy and subsequent under-investment makes it a risky place to do business. Then add to this the threat of natural disasters such as earthquakes and strong winds, it makes Venezuela a place to avoid.
The above list shows that plummeting oil prices, natural disasters and political uncertainty appear to be the main threats to the resilience of a country’s supply chain.
When looking at countries with the best performing supply chains then Europe contains many top countries. The ten most resilient countries in 2016 were ranked as follows (in descending order):
7. US (Region 3 –Mid West)
This index provides a useful tool to businesses and allows them to try and balance supply chain needs with supply chain risk on a global scale. Companies can plan against risks and can work to ensure that their business is resilient to withstand known threats to their supply chain. The knowledge provided by the index allows companies to enhance their competitive marketplace, when interpreted and acted upon correctly.