Screen capture - 2021 Index

SINGAPORE—Asia remains vulnerable to significant business disruption according to the newly released 2021 FM Global Resilience Index [www.fmglobal.com/resilienceindex], the definitive global ranking of countries and territories by the resilience of their business environments. This year’s index demonstrates the relative difference between the region’s economies, where resilient countries like Singapore are becoming more so, widening the gap to less resilient regional neighbours and creating cause for concern as economies seek to recover and adapt multi-market supply chains and pursue opportunities for growth.

Singapore surpassed Hong Kong (SAR) as Asia’s most resilient country in this year’s rankings for the first time and is the region’s biggest mover, rising 10 places to rank 12th overall due to the inclusion of new, more incisive global earthquake data incorporated into the 2021 index calculations.

Hong Kong dropped 7 places, from 19 to 26 in the index mainly due to increased political risk due to political tensions.

China, which the index divides into three territories due to disparate exposure to natural hazards like wind, flood and earthquake, saw the central and western part of the country drop 6 spots from 65 to 71, due to increased earthquake exposure.

Elsewhere in the region, the relative resilience of countries and territories continues to languish with Thailand (ranked 70) Indonesia (82), Philippines (89) and Vietnam (96) all filling places in the bottom half of the Index. 

“As the region’s risk landscape becomes more complex, it is critical for businesses operating in multiple markets to maintain awareness of the drivers of risk across their supply chains to brace for unexpected business interruption,” said Tan Hian Hong, vice president, FM Global Asia. “Recent events in Myanmar and the Suez Canal show that risk is not evenly distributed, as one country’s vulnerability can be another’s costly business disruption, so understanding the impact on distributed supply chains and regional property assets is critical because of the increased threats posed by the impact of a changing climate and, increasingly, cyberattack.”

“When you look at the pattern of global events, it is not hard to project significant supply chain impact in Asia in the near future,” added Tan. “A strong economic recovery needs to build in resilience from the outset because, as the region’s resilience rankings show, disruption is a matter of when, not if. Those that come through strongest will be those that have managed their exposure to known and unknown risk most effectively.”

The FM Global Resilience Index is online and interactive, and the rich underlying data for 130 countries and territories can be downloaded at no cost and incorporated into a range of business processes. Produced by FM Global, one of the world’s largest commercial property insurers, it provides a composite picture of 12 objective measures reflecting each country or territory’s economic, risk quality and supply chain conditions.

The resource helps senior executives create, evaluate and manage resilient multinational businesses by making informed choices about site selection, partnerships and geographic markets.

Beyond Asia – Top, bottom, risers and fallers

Top-ranked Denmark is known for its quality of life, education, health care and income equality. In this year’s index, it benefits from higher resilience rankings than last year in the measures for economic productivity, fire risk quality and oil intensity (signifying increased vulnerability to oil shock). The Scandinavian nation rises from third in last year’s index to its first-ever top ranking, bumping Norway, which has held the No. 1 spot in the index in recent years, into second place.

Luxembourg rounds out the top three countries in overall business resilience, with Western Europe taking 9 of the top 10 places. The Central United States is the lone exception, occupying ninth place as it did last year.

Ukraine is the index’s biggest riser, soaring from 84 to 63 based on improved resilience rankings in  multiple measures, including productivity, oil intensity, natural hazard exposure, inherent cyber risk and control of corruption.

The biggest faller is Oman, sinking from 57 to 69 because of steep drops in productivity and oil intensity. The drop may have been even larger if not for an improved ranking in natural hazard exposure due to new data relating to decreased earthquake exposure.

Climate Risk

FM Global has noted growing concerns among global companies over risks related to the changing climate. Companies have contended with severe floods, droughts, wildfires, precipitation and windstorms around the world.

Natural hazard exposure is one of several climate-related resilience measures in the index, and a frequent contributor to that exposure is flood risk – among the changing climate’s most tangible threats. A related index measure is natural hazard risk quality, a reflection of how well countries are mitigating their exposure to natural hazards. A third index measure with climate risk implications is urbanization rate. The faster a region’s urbanization, the more business property and value is in harm’s way during any given climate-related event. Finally, the quality of [transport and utilities] infrastructure provides important clues about a country’s prospective response to extreme conditions.

Additional index resources

About FM Global

Established nearly 200 years ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organizations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection.

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