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Ukraine sinks and Taiwan soars in rankings of supply chain risk

Staff writer ▼ | April 4, 2015
Ukraine and Thailand poses significant challenges for companies considering expanding their supply chains there. Meanwhile, Norway is ranked the No1.
Taiwan factory
Supply chains   2015 FM Global Resilience Index
Exactly what risk do these countries present? Their vulnerabilities, as well as those of many other countries, are quantified in the definitive ranking of supply chain resilience around the world, the 2015 FM Global Resilience Index.

Ukraine fell 31 places in this year's FM Global Resilience Index to 107th, the biggest year-over-year fall in the rankings, owing directly to Russian military intervention there. This worsening political risk and a weakened infrastructure are the main negative factors affecting the rank of Europe's largest country.

Thailand, one of the world's top exporters, fell 20 places to 82nd of 130 countries and territories examined. In particular, the ranking reflects poorer perceptions of the country's infrastructure (e.g., transport, telephony and energy) and the quality of local suppliers as well as a decline in political stability and the quality of fire risk management.

These matters compound the misery of the country's 2011 floods that wreaked an estimated $45 billion in losses and business disruption worldwide.

There was good news, however, for Taiwan. It soared 52 places in the annual rankings to 37th overall, a bigger rise than any other country. Its ascension is mainly due to a substantial improvement in the country's commitment to risk management, as it relates to both natural hazard risk and fire risk.

Updated annually by commercial property insurer FM Global, the data-driven 2015 FM Global Resilience Index gauges resilience (the flipside of risk) along nine dimensions. The Index compiles vetted data from sources such as the International Monetary Fund, World Bank, World Economic Forum and FM Global's database of more than 100,000 client locations. Countries and territories examined are ranked from most to least resilient.

Norway is ranked #1 in the Index as the country best suited for companies seeking to avoid disruptions in their global supply chain operations. Venezuela ranked last on the list of the 130 countries and territories listed. The three regions of the United States – East, Central and West – all rank in the top 25.

The United States and China are each segmented into three separate regions because the geographic spread of these countries produces significantly disparate exposures to natural hazards. Region 3 of the U.S., which includes most of the central part of the country, ranks 10th. Region 1, encompassing much of the East Coast, ranks 16th and Region 2, primarily the West Coast, ranks 21st.

China's three regions rank 63rd (Region 3), 64th (Region 1), and 69th (Region 2). Beyond natural disaster risk, China's other challenges range from "poor accountability and transparency, high levels of perceived corruption and growing security concerns to problems in its financial sector, especially with regard to the fragile position of its banks".