Hong Kong leads Asia in the latest FM Global Resilience Index, which annually ranks 130 countries and territories by the resilience of their business environments, including supply chains.
The Resilience Index, compiled by mutual insurance company FM Global along with Pentland Analytics, assesses 12 economic, risk and supply chain-related measures in determining the global rankings.
Topping the charts in the first five positions: Norway, Denmark, Switzerland, Germany and Finland. At the opposite extreme, Mozambique, Chad, Ethiopia, Venezuela and Haiti rounded out the bottom five.
In Asia, Hong Kong came in at 18th place globally with Singapore not far behind at 21st place, reflecting the high quality of their infrastructure, fire risk quality, control of corruption and lower political risk, according to the Index’s authors.
Perhaps unsurprisingly, Singapore also took top honours in the overall Supply Chain category which looks at four key factors: Control of corruption; quality of infrastructure; corporate governance (which Singapore topped); and supply chain visibility.
Scoring a perfect 100, Singapore led the world in the supply chain category followed by Hong Kong (93.2), UK (92.6), Denmark (91.3), Finland and New Zealand (90.7) and Canada (89).
Beyond the overall resilience rankings of Hong Kong and Singapore, Japan ranked 27, South Korea 38, Malaysia 40 and Taiwan 43. And while India straddled the middle ground, ranking 59, the picture was much less rosy for many Asian countries.
Thailand came in at 73, Indonesia ranked 77 and the Philippines ranked 93 occupying the bottom half of the Index due to various risk factors including inherent cyber risk, political risk, fire risk quality and natural hazard exposure, the authors add.
At the same time, rapid urban growth in China Zone 3 (the study splits the country into three regions based on dominant natural hazards) at 68 and Vietnam ranked 88, also affected their overall rankings due to the potential strain on infrastructure and impact of flood, fire and earthquake, the Index’s authors say. China’s other two zones ranked at 74 and 76.
“This year’s Resilience Index is a strong reminder to business leaders of the importance of carefully evaluating a country’s or territory’s unique exposures such as natural hazards, rapid urbanisation, as well as political and cyber risk,” says David Johnson, regional senior VP of FM Global’s Asia Operations.
“The Resilience Index puts risk on the boardroom table, giving executives insight into potential exposures and another tool to inform conversations about the ways to mitigate threats to their business growth,” he adds.
Johnson cities the example from the category of natural hazard risk quality where Vietnam fell 38 places to last place (ranked 130) and China Regions 1, 2 and 3 dropped 23 places (ranked 89), due to the quality and enforcement of their building codes with respect to natural hazard-resistant design. “This may reflect a struggle to keep pace with the prevalence of natural hazards and can help to inform risk improvement strategies,” Johnson adds.
“The nature of business resilience across Asia remains complex and reflects the diversity of the region’s risk exposures,” Johnson notes. “Singapore’s reputation as a global commercial business hub is once again reflected in the Index, but it also highlights the need for diligence among businesses with facilities, or operations in less resilient locations.
“This year’s Index is a reminder that the right choices need to be made to prevent losses and safeguard your company’s bottom line” he adds.
The Index is designed to help chief financial officers (CFOs) and other business leaders choose resilience as they manage their own risk, site facilities, extend supply chains and cultivate customers. FM Global’s experience indicates that a lack of resilience can have far-reaching, long-lasting effects on business value and performance, the company says.
“Building or maintaining resilience is a core challenge for CEOs and CFOs in the context of global trade conflicts, regional economic fluctuations, political uncertainty and natural hazards,” adds Johnson.
“A focus on resilience today can create a long-term competitive advantage for businesses across Asia.”
For more information on the report along with downloadable data, click here.