Are you looking for new international suppliers for your company? Or thinking about where to open an overseas office? When you evaluate your international customers, do you care about the stability of their business environment? What about government corruption? If you already have foreign offices, have you checked on the risks of natural disasters like floods and earthquakes in those locations? How sound is the infrastructure there?
For country-by-country shortcut answers to those questions, consider the “2015 FM Global Resilience Index,” a ranking of 130 countries by FM Global, the 180-year-old international commercial and industrial insurance company based in Johnston, RI. FM Global’s main business: providing loss prevention services to big companies around the globe.
FM Global puts countries through a rigorous evaluation process and produces a list of the places it deems most resilient. Landing in first place is a country that may not be at the top of your list for opening a subsidiary or factory: Norway (ExxonMobil has operated there for more than 120 years; ConocoPhillips also has longstanding oil fields there). Coming in second is a more obvious choice, given its bank secrecy laws and stable political environment: Switzerland. The Netherlands, with its healthy economy, solid infrastructure, sophisticated ports, extensive offshore wind power system, and secure dyke system, is in third place.
The U.S. doesn’t rank until 10th place and then only for a portion of the country FM Global calls Region 3, made up of 26 states in the Southwest, Midwest, and the South, plus Washington, DC., which FM Global deems safe from wind storms and earthquakes. The U.S.’s Region 1, which includes Florida, Louisiana, New Jersey and New York, is vulnerable to storms and places 16th on the list. U.S. Region 3, threatened by earthquakes, ranks in 21st place, just behind the United Kingdom and above Portugal. Region 3 includes California, Oregon, Hawaii and Alaska.
FM Global’s methodology involves measuring countries’ strength in nine areas, under three rubrics: economic, risk quality and supply chain. It looks at these nine things:
1. GDP per capita
2. Political risk including terrorism
3. “Oil intensity,” meaning the chance the country will experience an oil shortage
4. Exposure to natural hazards
5. “Quality of natural hazard risk management,” meaning the country’s preparedness to deal with a disaster like an earthquake or a flood
6. Quality of fire risk management
7. Control of corruption
8. Quality of the infrastructure
9. Quality of local supplies
FM Global used the following sources: The International Monetary Fund supplies the GDP data, the information about the oil supply is from the U.S. Energy Information Administration, and the data on political risk and corruption comes from the World Bank’s “Worldwide Governance Indicators,” which pulls from 31 data sources. The Global Competitiveness Report, put together by the World Economic Forum and based on its survey of thousands of executives, is the source of the data on infrastructure and local supply chain quality. Finally the data on risks like exposure to natural hazards, readiness to manage natural calamities and ability to fight fires, all come from an algorithm FM Global developed to calculate risk at more than 100,000 commercial properties it insures around the world.
There are no surprises among the top 25 countries, which I’ll list below. They’re mostly European—Ireland, Luxembourg, Germany, Finland, Belgium, Denmark, Sweden, etc. New Zealand and Australia also make the top 25, as do Hong Kong, Singapore and Qatar.
The 25 Most Reliable Countries
Which are the least reliable countries? I’ve also listed the worst 25 below, starting with the least resilient. Venezuela tops the list, with political unrest, a collapsing economy and building codes and standards that don’t meet FM Global’s approval, says Jon Hall, FM Global's chief operating officer. Fire protection there is also lax and corruption is a huge problem. The German NGO Transparency International pegs Venezuela at No. 161 out of the 174 countries it ranks on its Corruptions Perceptions Index, which evaluates how corrupt a country’s public sector is perceived to be. (Somalia, North Korea and Sudan are the most corrupt and Denmark, New Zealand and Finland are the least.) Kyrgyz Republic, the second-least-resilient country, has the lowest GDP per capita of the companies on the list. Almost 40% of its citizens live below the poverty line and it’s still recovering from a political and economic crisis that followed the ousting of its president in 2010. It ranks at No. 136 on Transparency International’s corruption index.
The 25 Least Reliable Countries
One caveat: FM Global’s list doesn’t include some of the least stable, most disaster-prone countries in the world, like Haiti, Syria, Yemen, Iraq, Sudan and Congo, because FM Global couldn’t gather enough data about those places. Rwanda, an increasingly stable place to do business, is also missing. There are some 196 countries in the world, depending on how you count them (that includes Taiwan, which some countries, like the U.S., don’t recognize as independent states), so the list is missing 66 of them.
