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FM Global ranks locales worldwide by quality of their resilience

FM Global ranks locales worldwide by quality of their resilience

The central United States ranks seventh in the third annual FM Global Resilience Index, the insurer said Tuesday.

The index ranks 130 countries and territories according to nine drivers that can affect the vulnerability of a business in those regions. The drivers are grouped into three categories: economic, risk quality and supply chain factors.

Norway lost the top spot this year due to declining oil prices and switched places with Switzerland, which came in second last year. FM Global said both countries offer a world-class resilient environment for executives looking to source product or locate facilities. These two countries are followed by Ireland, Germany, Luxembourg and the Netherlands.

Both the U.S. and China are divided into three distinct regions reflecting the geographic spread of each country, as each is exposed to a wide range of natural hazards, FM Global said.

U.S. Region 3, ranked seventh, is the central region of the U.S., which is subject to a variety of natural hazards but with no one risk dominant. U.S. Region 1, ranked 11th, covers the eastern region of the U.S. where the dominant natural hazard is wind exposure, while U.S. Region 2, ranked 21st, covers the western region and is primarily exposed to earthquake risk.

“By giving executives easy access to authoritative information on factors that could disrupt their supply chains, the FM Global Resilience Index provides a simple way to analyze the potential for business risk and drive better decisions,” Bret Ahnell, executive vice president at FM Global, said in a statement. “Resilient supply chains give businesses a distinct advantage by protecting their operational integrity, revenue stream, market share and shareholder value. A fragile supply chain, on the other hand, often harms the company involved, sometimes for the long term.”

Kuwait saw one of the biggest declines, dropping from 50 last year to 59 in 2016, as its gross domestic product was hit hard by lower oil prices. Ukraine also saw a big drop, tumbling from 107 to 125, due to tensions within the country and with Russia.

Armenia, ranked 52nd, and Malawi, ranked 84th, are two of the biggest risers in this year's index, driven by an increased resilience to oil shock. The consumption of oil has decreased in both countries, FM Global said, leaving them both less exposed to the dynamics of the oil market.

Venezuela had the lowest rating for the second year in a row, FM Global said, due to the natural hazards of wind and earthquakes, as well perceptions of extensive corruption, poor infrastructure and poorly regarded supplier quality.

Political risk is one of the nine index drivers, and terrorism is an important component of that risk. So far this year, there have been deadly terrorist attacks in Pakistan, ranked 117th, Belgium, ranked 17th, Nigeria, ranked 116th, and Turkey, ranked 79th.

The United Kingdom is ranked 20th in the index, but that could change if the country decides to leave the European Union. For those who want the U.K. to remain in the E.U., a vote to leave could represent a significant risk to the country's productivity and growth prospects, FM Global said.