Doing business on a global scale is a complicated adventure. The services, transparency and expediency you’re accustomed to at home may not exist in some markets around the world, and deciding what foreign lands to do business in often means thinking long and hard about how to avoid risk.
With that in mind, we look to a recently released report on which countries provide fair, predictable environments for business deals and operation, and which ones offer high risk, opaqueness and possible cultures of corruption and graft.
The report in question is the product of analysis by FM Global, a 180-year-old Rhode Island-based commercial and industrial insurance company which scores countries based on economic stability, the quality of its supply chains and the risk investors and businesses face there. This the fourth year FM has created such a study.
For a look at the ten countries FM Global found to be the most reliable to do business in, see our slideshow below. For the roster of least reliable nations, read on.
Switzerland tops this year’s list of Most Reliable Countries to Do Business In, as it has for the past four years. The nation, which has a long history of neutrality and political stability. Switzerland’s infrastructure is sound and corruption is in check, according to FM’s research.
In second place we find Luxembourg, a tiny nation nestled between Germany, Belgium and France; which has appeared in the top ten each year that FM has conducted its analysis. Looking at the country’s results over the past several years, Luxembourg has seen a steady rise from 8th place in the report’s first year back in 2013. One reason, FM notes, is that the country has become less dependent on oil for productivity and it has enacted business-friendly regulations.
The United States, which FM breaks up into three different geographical sectors, occupies two positions within the top-10: in ninth place we see the central U.S., which includes the vast majority of the country’s interior midwest plus Vermont. In tenth place we find the eastern section of the country, which incorporates New England, the eastern seaboard, Florida and the southern gulf states on through Texas.
On the other end of the reliability spectrum, the least reliable nation in which to do business in is Haiti, due mainly to its status as one of the world’s poorest countries with infrastructure and business environment left wanting in several categories. Venezuela is third, due to the perception that it is largely corrupt, infrastructure is poor, local vendor quality is questionable and natural hazards such as wind and earthquakes offer added risks.
The 10 Least Reliable Countries To Do Business In
• Myanmar
• Madagascar
• Nigeria
• Lebanon
• Pakistan
• Chad
• Ethiopia
• Nepal
• Venezuela
• Haiti (last place)
This year FM Global has introduced several new criteria to its analysis of risk within a country: urbanization rate, inherent cyber risk and supply chain visibility. Urbanization rate, Ahnell explained, refers to rapid, unplanned development which puts stress on power grids, water supply and infrastructure as a whole.
Cyber risk is an assessment of how vulnerable computer systems are to hacking, based on internet penetration, and the speed with which a nation’s government would get involved should a business suffer a cyber-attack and need help to recover. Supply chain visibility risks involve the ability to track the movement of goods throughout a particular country.
Regarding cyber risks, countries that show the highest amount of risk in that category often have high levels of internet penetration and low levels of civil liberties, says Ahnell, and the nations suffering the greatest amount of cyber risk tend to be in the Middle East—Saudi Arabia, Bahrain, the United Arab Emirates and Qatar. India represents the flip side of that phenomenon, says Ahnell. “Its got high internet penetration but, equally, it’s got a very robust and growing information technology sector and the civil liberties are going to be much stronger there.”
Supply chain has a dramatic impact on risk, says Ahnell, and a country like Russia would do well to shore up its risks in that category. Overall the nation ranked 57 out of 130, yet its supply chain risk factors rank 83rd. “The ability to track and trace supplies moving throughout Russia is not very good.” Germany, on the other hand, which came in fifth place overall, ranks highly in its supply chain score in quality and visibility.
Methodology
In analyzing risk throughout the world, FM Global evaluates factors such as Economic Risk (political, productivity, etc.), Risk Quality (natural hazards, fire safety), and supply chain issues (corruption and infrastructure).
Data for the report was sourced from the International Monetary Fund, the World Bank, the World Economic Forum and U.S. Energy Information Administration.
New in 2017, the Index also includes data from the United Nations and Freedom House.
Ready at FORBES