When natural dangers and disasters are few and far between in your own country, it may come as a surprise to know how high the levels of risk are in other parts of the world. When natural catastrophes come with the territory, the only solution is to be able to rebound from them. Some nations are better equipped to do this than others. From a business perspective, there is also a correlation between lower cost providers and less resilience. In other words, if you are selecting foreign suppliers on the basis of lower prices, it pays to check the exposure of the supplier’s country to hazards that could hinder the supplier’s capability to provide goods or services.
A recent study by risk analytics, research and forecasting company Verisk Maplecroft shows that South Asian countries are among the most affected, yet the least prepared to handle natural hazards. The company compares nations with its Natural Hazards Vulnerability Index, based on each country’s ability to handle and recover from disasters like cyclones, floods, earthquakes, wildfires and tsunamis. Higher indexes indicate greater resilience. Thus Japan achieves 183, whereas China scores 126, and India, Pakistan and Bangladesh are rated at 49, 43 and 37, respectively.
In all, 1.4 billion people in South Asia, which is 81% of the region’s population, are at risk from serious natural hazards and live in areas likely to be unable to manage and rebound from a major natural disaster. In today’s complex supply chains, you might not see a direct link between your business and enterprises located in areas at risk. Yet products, components, subassemblies or services on which your own business continuity depends may have their roots in one or other of the countries concerned. To really analyse and protect your own chances of business continuity, it therefore also pays to dig deeper than “next-door” suppliers, in order to see whether they in turn depend on partners in high risk, low index countries, which could bring the risk right to your doorstep.