Businesses with Best Risk, Resilience will Recover Faster

Businesses with Best Risk, Resilience will Recover Faster

May 21, 2020

The latest 2020 FM Global Resilience Index suggests that high-ranking countries are well positioned for a post-pandemic business recovery. FM Global APAC Senior VP Alex Tadmoury argues those who invest in thorough risk and resilience analysis and timely loss prevention measures will be the most successful.

Resilience has never been more critical as businesses emerge from the COVID-19 crisis and look to recovery, with top-ranked Asian countries and territories in the 2020 FM Global Resilience Index, including Hong Kong (ranked 19), Singapore (ranked 22), Japan (ranked 26), Taiwan (ranked 29)
and South Korea (ranked 37), demonstrating they may have the foundation for a robust rebound.

The annual index, published this month by FM Global, one of the world’s largest commercial property
insurers, is the definitive ranking of nearly 130 countries by the resilience of their business environments.

It provides companies with objective information about countries’ economic, risk quality and supply
chain resilience – factors that create a springboard for businesses working to recover from the pandemic.

In addition to outlining the post-pandemic business landscape, the FM Global Resilience Index stands as
a reminder that conventional business risks such as typhoons, flood, drought, fire and earthquakes, continue to threaten operations and overall business value.

Among the index’s 12 economic, risk and supply chain-related measures of resilience that underpin a
country’s overall ranking, no Asian country ranked inside the top 30 for their ‘natural hazard risk quality’ – a measure of the quality and enforcement of a country’s building codes with respect to natural hazard resistance combined with the level of risk improvement achieved.

For natural hazard risk quality, Japan (ranked 32), Singapore (ranked 33), Taiwan (ranked 35) and Hong Kong (ranked 40) stand strongly in contrast to China Regions 1, 2 and 3 (ranked 91),1 Cambodia, Sri Lanka, Laos, and Nepal (all tied at 97) and Vietnam (ranked last at 130).

Within the index, a number of Asian countries fell in 2020 in regards to ‘inherent cyber risk’ including Taiwan (from 45 to 93), Hong Kong (from 72 to 97) and Vietnam (from 103 to 116) reflecting the evolving cyber threat landscape that continues to be a board level concern and can challenge the resilience of many businesses across Asia as internet penetration increases.

According to FM Global APAC Senior VP Alex Tadmoury, as the world looks ahead to post-COVID-19 recovery, resilience takes on new meaning for many businesses across Asia.

“The 2020 FM Global Resilience Index demonstrates that attention must still be paid to ever-present and traditional business risks, such as natural disaster and cyber security. These remain obstacles for many countries across Asia, heightened by new challenges created by the pandemic. Those that endure most successfully will be those who invest in thorough risk-and-resilience analysis and timely loss prevention measures,” says Tadmoury.

Top, bottom, risers, fallers

According to Tadmoury, overall, many countries across Asia remained stable compared to previous years. Notably, a major riser in this year’s index is Taiwan, which climbed 6 places to 29th based on improvements in its natural hazard risk quality, and quality of its infrastructure. Taiwan’s urbanization improved dramatically, moving the country up 42 places for that metric (from 122 to 80). Taiwan also has demonstrated its resilience, seeing success in containment of COVID-19.

China significantly improved for corporate governance from last year’s ranking (from 98 to 74), indicating greater scrutiny of auditing and accounting standards, conflict of interest regulation and shareholder governance.

Overall, the index’s top-ranked regions (in descending order) are Norway, Switzerland, Demark, Germany, Sweden, Finland, Luxembourg, Austria, Central United States and Eastern United States (both the U.S. and China comprise three regions with differing natural hazard exposure).

Norway occupies the top spot again this year, supported by strong economic productivity, a stable
political environment, low corruption, high natural hazard risk quality and robust corporate governance.

The bottom 10 (in descending order) are Nicaragua, Nepal, Mali, Mozambique, Iran, Lebanon, Chad,
Ethiopia, Venezuela and Haiti.

A major faller in the index is Nicaragua which fell 9 places to 121st place due to increases in cyber risk and political risk as well as decreased control of corruption.

How to use the index

Index data like this is designed to help chief financial officers (CFOs) and other business leaders make prudent business decisions as they site facilities, extend supply chains and cultivate customers. According to FM Global Chief Investment Officer Sanjay Chawla, a lack of business resilience may result in long-lasting effects on market share, growth opportunities and investor confidence – all contributors to business value.

“Resilience is ultimately a product of the choices businesses make, including where they do business and how they invest in each location. The index is designed to make these choices clearer as executives weigh the regular strategic reasons – logistics, labor force and market opportunity – for selecting particular geographies,” says Chawla.


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