While some risks are common to some or all industries, others may be unique to an industry or even a company. Not only can the magnitude of risk be different region-to-region, but the types of risk can be quite different as well. A company that relies on minerals that originate in conflict regions, for example, is focused on a set of issues that are quite different from a financial services company that does not source raw materials.
Not surprisingly, many companies take on the risk perspectives and appetites demonstrated by their home country, according to research by MIT’s Global SCALE Network, an international alliance of supply-chain education centers. One way to anticipate and prepare for potential regional risks is through FMGlobal’s Risk & Resiliency Country Index. It’s a composite risk rating that’s free of charge for anyone to browse.
The index covers 130 countries and includes 18 variables across three categories: economic, risk and supply-chain infrastructure.
Ethical concerns also vary across geographic regions, and as supply chains become increasingly global, so do likelihoods that professionals will encounter unethical demands or corruption by public officials. Knowledge of a country’s corruption index is one more piece of information that supports the identification of risk. Transparency International is an organization that is committed to halting bribery, secret deals and the abuse of power — particularly by politicians and public officials. A major part of its efforts is the development of corruption indexes by country, which are updated annually.
Companies domiciled in the Middle East are most likely to have established business models with documented risk-management processes — 61% vs. just 42% in Latin America and 58% in Europe. Middle Eastern companies are also more likely to agree that their firms understand the velocity of risk. However, they score lowest in agility and second lowest in resiliency compared to other major regions of the globe.
The Middle East scores quite low relative to maintaining a Risk Manager or Risk Group, but average relative to maintaining a Business Continuity Group, according to MIT. Within FMGlobal’s index, the Middle East consistently scores in the second and third quartiles.
When it comes to overall supply-chain resiliency, it appears the Middle East still has a lot of work ahead.
Gregory Schlegel is founder of The Supply Chain Risk Management Consortium and executive-in-residence at Lehigh University.
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