Harnessing the power of data to make good supply chain decisions

Where in the world is your company vulnerable to supply chain disruption? Good data lie at the heart of building business resilience, according to FM Global.

In this year’s annual World Economic Forum Global Risk Report, natural catastrophes were ranked in the top 10 highest risks of concern for 2015. This is hardly surprising when looking back into the not-so-distant past. The Japanese tsunami in 2011, Superstorm Sandy in 2012 and the devastating earthquake that took place in Nepal in April 2015 will live long in the memory, and show how extreme weather can strike at any time, with overwhelming consequences.

Natural catastrophes, however, are just one of the risks that multinationals have to consider to maintain reliable business operations. In today’s business world, political conflict, corruption, reliance on oil, the management of fire risk, and the quality of infrastructure all play a part in defining what we call a company’s resilience –  i.e. the ability to recover quickly from a disruption. 

We believe that building business resilience depends strongly on being armed with relevant data and sound research in order to make informed supply chain decisions.

In fact, we believe that the majority of property loss is preventable for any organisation, as long as practical steps are taken to protect business continuity and safeguard shareholder value. At the heart of all this lies data.

That’s why in 2014, we embarked upon a mission to present organisations around the world with powerful insights to help them answer the question where in the world is your company vulnerable to supply chain disruption?

The FM Global Resilience Index is the first data-driven tool to rank the supply chain resilience of 130 countries and territories around the world to help executives prioritise where they should focus their risk management and investment efforts. The index aggregates nine drivers of resilience into three factors—economic, risk quality and the supply chain itself.

Some of the most interesting results from the FM Global Resilience Index are listed below, but you can access all of the results that are published publicly here. 

1. Norway retains its top position in the index from last year, with strong results for economic productivity, control of corruption, political risk and resilience to an oil shock. The country’s management of fire risk offers opportunity to improve still further.
2. Despite its massive oil reserves, Venezuela ranks 130, placing it at the bottom of the index, and reflecting the many challenges South America faces, ranging from economic and political to geological, with its west coast on the Pacific ‘Ring of Fire’.
3. The leading European Union (EU) nation is Ireland ranked at four, with Germany at six and France slipping to 19 reflecting a rising perceived risk of terrorism and falling perceptions of both infrastructure and suppliers. Greece fell from 54 to 65, largely as a result of the political backdrop and a period of perceived turbulence within the EU.
4. Taiwan has jumped the most in the index – 52 places in the annual ranking to 37; more than any other country. Its rise is due mainly to a substantial improvement in the country’s commitment to risk management relating to natural hazard risk and fire risk. Given the country’s location at the western edge of the Philippine sea plate, this is a welcome development.
5. Ukraine, ranked 107, and Kazakhstan, ranked 102, dropped more places this year than any other country; a fall of 31 places each. For Ukraine, the worsening political risk, combined with poorer infrastructure, was to blame. The fall for Kazakhstan this year reflects a poorer commitment to natural hazard risk management in the region.
6. In the European Union (EU), Greece fell from 54 to 65. The recent victory of the anti-austerity Syriza party will almost certainly usher in a period of greater friction and turbulence with its EU partners.

FM Global will be showcasing the findings of their Global Resilience Index at the annual Airmic conference in Liverpool this month. Visit their stand in the exhibition hall to find out more.