Global Risks Index Pinpoints Threats to Multinational Supply Chains
A new international study, released by risk consultancy Maplecroft, has produced a definitive ranking of countries with the most hazardous business environments.
The Global Risks Index (GRI) analyses 26 different risk indices for 163 countries and identifies areas of high vulnerability for organisations with global footprints. Somalia, Sudan, DR Congo, Chad, Afghanistan, Ethiopia, Myanmar, Nigeria and Burundi are rated ‘extreme risk’ and top the ranking, while the most challenging nations for the business community include Pakistan (16), India (27) Indonesia (32), Iran (35) and the Philippines (41), which all are at high risk.
Maplecroft has designed the index for multinational organisations that are increasingly confronted by complex global risks traditionally seen as external to business. It provides comparable risk intelligence for each country across 10 key areas: energy security, corporate governance and corruption, emerging powers, terrorism and conflict, macroeconomics, government risk and geopolitics, climate change and environment, health, safety and pandemics, natural hazards and societal and human rights risk.
The GRI will enable business to identify specific areas of high risk in their global value chains, giving them the ability to manage and mitigate risk, improve business performance and enhance strategic investment and corporate social responsibility planning.
“For any business, monitoring key global risks is critical to ensuring profitable investments,” said Maplecroft’s chief executive Alyson Warhurst. “Global risk management proficiency that is both informed and proactive, combined with responsible business practice, can lead to an improvement in performance in countries of high and extreme risk. This can contribute to business opportunities and reputational leadership on the part of business, as well as to ensure a long term social licence to operate.”
Of the emerging BRICS economies (Brazil, Russia, India, China and South Africa), India is most vulnerable and of distinct importance to business because of its huge role in global supply chains. Factors that contribute to its poor ranking include: high population density; security risks posed by Maoist and Islamist violence; resource security – relating to energy, water and food; and human rights violations. Brazil (92), Russia (69), China (70) and South Africa (87) are all rated medium risk.