Global Uncertainty Puts Resiliency in Focus

Especially in the global electronics industry, supply chain disruptors, including economic, political, geographic and more, abound.  Perhaps more than in other sectors, electronics OEMs and their suppliers find themselves dealing with a variety of countries, each with its own risk profile.  

FM Global recently released its 2019 FM Global Resilience Index, which for the sixth year ranks 130 countries based on risk profile.  This year, the organization added corporate governance as a new data point in the ranking. “A tool like this is helpful for any company in the industry that does business all over the world but even more so for an industry like electronics that is highly susceptible to supply chain disruption,”  Eric Jones, vice president, Global Manager, Business Risk Consulting, FM Global told EBN. “Companies don’t like volatility. It’s important to stop and thinka bout how a given supplier and its risk profile might change in order to develop a business profile. How does it introduce volatility or decrease our ability to be nimble?”

Extreme weather events ranging from wild fires and earthquakes to hurricanes and typhoons took center stage this past year. Climate change is becoming a critical business concern.  Typhoons and earthquakes hit Japan’s economy. Water concerns, including flooding in India, Italy, and Austria, and drought in China and Argentina, were part of the climate change puzzle as well. In fact, 2018, was the costliest year ever in terms of disasters. Further, ongoing concern about a global economic slowdown adds to the overall uncertainty.

Added to that, though, is the very real problem of cyberthreats, both the various countries and to connected industrial equipment and machinery. “The frequency and severity have picked up, but so has awareness,” said Jones.  Germany, France, Australia and the United States all improved themselves in the inherent cyber risk category. “Major data breaches and sophisticated malicious hacks in the past 12 months continued to serve as a reminder that expanding one’s vendors and service providers around the world brings with it broader business perils,” the Index report said.

Meanwhile, shifting tariff and trade tensions are of particular interest to supply chain professionals.  Malaysia, Thailand, Vietnam, and the Philippines are potentially going to feel the ripple of tariffs against China.

In terms of overall performance, Norway took the top spot, boasting economic productivity, political stability, control of corruption and corporate governance, as well as a low incidence of natural hazards.  Denmark moved from seventh place into second in 2019—driven largely by improved supply chain visibility—while Switzerland rounded out the top three. In the area of corporate governance, the leaders included Singapore, New Zealand and Canada.

At the bottom of the list, Haiti placed last with Venezuela and Ethiopa in the next highest spots. These countries suffer from exposure to natural disasters.

Although the list was fairly stable compared to last year, Rwanda rose 35 places, which can be attributed to improvements in the country’s governance and decreased urbanization.

The biggest riser in the 2019 index is Rwanda(ranked 77), which rose 35 places. Largely due to a decrease in urbanization rate and an impressive improvement in corporate governance. Thailand, meanwhile, climbed up 16 spots due to significant improvement in supply chain visibility and corporate governance.  The country, however, is still vulnerable to extreme weather that should be addressed by natural risk management practices, FM Global said.   

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