FM Global, a multinational property insurance firm, publishes the Global Resilience Index (GRI). The GRI measures the ability of 130 different countries and regions to quickly and effectively adapt to disruptive events of all kinds, from climate-related natural disasters to adverse cybersecurity incidents.
Today, we’ll take just a moment to explore who is leading the Index, who’s at the back of the list, and, ultimately, how economic development organizations (EDOs) can use this information to their advantage when engaging with prospects.
Leading the pack
Perhaps unsurprisingly, Western Europe leads the way in global resilience, taking 4 of the top 5 spots in the list: Denmark, Switzerland, Luxembourg, and Germany take spots 1, 2, 3, and 5, respectively. Sweden, Norway, Austria, and Belgium are also in the top 10.
That’s not to say that Western Europe is alone in the world’s most resilient countries. Singapore takes the #4 spot, while the central region of the United States earns #6 on the list. But Western Europe is the clear global leader in its ability to respond to disruption and unexpected challenges.
Haiti, Venezuela, and Chad bring up the rear of the GRI. All three of these struggling nations rank extraordinarily low in every category the GRI measures: economic factors, risk quality, and supply chain. Haiti, in particular, has recently faced unimaginable challenges that go to the heart of its ability to maintain a functional business environment.
How do I use this data from an EDO & FDI perspective?
Once you know the sorts of risks – which the GRI helpfully breaks down into economic, risk quality, and supply chain categories – FDI might inherit by relocating to your region, you can use that info to more effectively address prospect company concerns and better target your marketing.
For example, say you’re located in Canada, which exhibits a broadly favorable Resilience Index and ranks at 28 out of 130 regions. You can see, however, that economic risks are dragging down Canada’s overall score, with its productivity level ranking particularly low.
You might point out to prospects that your region outpaces the rest of Canada in terms of worker productivity, or offer solutions that might increase the general level of productivity amongst the company’s potential hires.
Similarly, you might target FDI prospects with less labor-intensive businesses – like tech companies – who would be less concerned about productivity deficits in the first place.
In these ways, you can tailor your region’s offering and incentives to foreign direct investment in an intelligent way, delivering benefits where they’re most needed and calming your prospects’ most severe anxieties.
An evolving Index
FM Global is continually developing and improving the GRI. They’ve recently added health expenditure and supply chain timeliness considerations to their list of relevant factors, and they’re consistently adding new measures, refining old ones, and discarding newly irrelevant factors.
All of this is done to ensure the Index’s continued relevance in a rapidly evolving and increasingly volatile global economy and environment. This has caused some countries to increase or decrease their category-specific rankings quite quickly. For example, Ukraine’s cyber risk ranking fell 28 places in 2022 (all the way to 61st place), due to aggressive network attacks conducted by hackers associated with Russia.
Wild & Weird
You should care about resilience because your prospects care. Foreign direct investment (FDI) is attracted to places it can reasonably expect will look the same (or better) tomorrow than they do today. And taking into account a country’s resilience is a great way for FDI to avoid adding unnecessary risk to their portfolios.
It’s a wild and weird world out there. None of us can accurately predict what tomorrow will bring. But some governments, markets, and regions have a track record of handling unpredictability and volatility with uncanny skill, while others regularly struggle to adapt to new realities.
Firms want to conduct business in regions that can stand against the unexpected. And understanding where your region ranks in terms of its resilience can help you inform your FDI prospects’ decisions about where to deploy their capital.