Eastern, central U.S. among top regions for enterprise resilienceReprints
The eastern and central United States rank in the top 10 in terms of enterprise resilience to disruptive events while the western region of the country ranks 18th, according to the 2017 FM Global Resilience Index.
The United States and China are ranked into three separate regions because of disparate exposure to natural hazards in the publicly available index, which ranks the resilience of 130 countries and territories based on 12 metrics in the economic, risk quality and supply chain categories.
“That’s because there are geographic zones that are so fundamentally different from a risk quality perspective that it will influence the outcome,” said Ronnie Gibson, manager of brand experience for the Johnston, Rhode Island-based mutual insurer.
For example, the earthquake risk in the western United States brings down the overall score for that region to 83.7 compared to the overall score of 89.2 in the East and 90.6 in the central United States.
The economic and supply chain scores for all three U.S. regions were the same at 58.1 and 86.3, respectively, but the West’s 75.1 risk quality score was well below the east region’s 95.1 and the central region’s 100 scores.
“What we’re talking about is resilience to significant disruption,” Mr. Gibson said. “I would argue that a major earthquake, you and I might think that’s going to be similar to a major hurricane, but in terms of long-term ability to recover from that event, I’m prepared to bet the earthquake is going to be longer term.”
Switzerland ranked No. 1 on the resilience scale with an overall score of 100 while Haiti scored at the bottom of the rankings with an overall score of zero.
“The idea really is that this is aimed at the C-Suite and it’s to help executives understand the relative resilience of countries to business disruption,” he said, adding that the information is normally used by companies looking to expand or invest in particular countries to gauge the risk.
The index measures new elements such as inherent cyber risk, which reflects a country’s vulnerability to a cyber attack and its ability to recover, according to FM Global data. It also now factors in urbanization rates, which serve as a proxy for stress on water supplies, power grids and other infrastructure that would be exacerbated by natural disasters. The index also now provides supply chain visibility, reflecting the ability to track and trace consignments across a country’s supply chain, according to the insurer.
Other drivers of resilience that form the index include: productivity, political risk, oil intensity, exposure to natural hazards, natural hazard risk quality, fire risk quality, control of corruption, quality of infrastructure and quality of local suppliers.
Given the 12 metrics, one particular driver doesn’t generally impact the overall score, but there are exceptions, Mr. Gibson said. Germany dropped down to a No. 5 overall ranking with a 94.4 score from a No. 2 ranking at a 98.4 score primarily due to the terrorist attacks in the country last year.
The United Kingdom ranked 16th on the list with an overall 84.4 score in this year’s index, but that score could be affected by the vote to exit the European Union.
“Brexit hasn’t shown up yet, but that’s not to say it won’t,” Mr. Gibson said.