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Cyber, political risks weigh on countries’ resilience: FM Global index

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The risk of a cyber attack has become a critical factor in the risk profile of many countries, while the United States faces escalating political risk, according to the 2018 FM Global Resilience Index.

Switzerland again holds the top spot in overall resilience in the index, followed by Luxembourg and Sweden — all the same as last year, according to the 2018 index published on Wednesday. Haiti is the bottom-ranked country, followed by Venezuela and Nepal — also the same order as last year.

But a deeper dive highlights some of the challenges countries have with particular risks such as cyber. France, for example, fell 33 places in the cyber resilience element of this year’s index to 101st of 130 regions from 68th in 2017, reflecting a deterioration in civil liberties and a slight uptick in the country’s internet penetration, according to a statement issued Wednesday by the Johnston, Rhode Island-based mutual insurer.

A 3% increase in internet penetration also explains Australia’s fall in cyber resilience to 75th from 66th.

Taiwan’s cyber resilience, on the other hand, rose to 50th from 107th — the biggest upswing in the index — due in large part to an increase in its civil liberties, according to the statement.

The United States and China are ranked into three separate regions because of disparate exposures to natural hazards in the publicly available index, which ranks the resilience of 130 countries and territories based on economic, risk quality and supply chain metrics and reflects business risks such as cyber attacks, political upheaval, fire and hurricanes.

Political risk in the United States soared as all three U.S. regions — East, Central and West — saw their rank in political resilience drop to 46th from 31st, likely reflecting a “turbulent diplomatic climate intensified by North Korea’s nuclear threat and signs of Russian election meddling,” according to the statement.

The political risk driver of the index draws on data from the World Bank and represents “perceptions of the likelihood that the government will be destabilized or overthrown by unconstitutional or violent means, including politically motivated violence and terrorism.”

Despite the political climate, however, the United States remains a country with a resilient environment for business, with all three regions coming in the top 12% of ranked countries overall: The U.S. Central region ranked ninth, the U.S. East region ranked 10th, and the U.S. West region ranked 15th overall, weighed down by earthquake risk.

China Zone 1 ranked 69th overall, while China Zone 2 ranked 71st and China Zone 3 ranked 65th — all weighed down by political and urbanization rate risks in the economic category, cyber risk and exposure to natural hazards.

Fire remains the leading cause of property damage worldwide — and one of the most preventable ones, according to the insurer. The Grenfell Tower fire in the United Kingdom that claimed 71 lives last June was a “stark reminder of fire’s threat to life and property.” The fire was blamed on highly combustible materials and a lack of sprinklers. The United Kingdom ranks 18th overall for its resilience to business disruption, but 34th in fire risk quality, which measures the quality and enforcement of a country’s building codes and an analysis of the fire risk at facilities visited by FM Global’s property risk engineers.