SCDigest Editorial Staff

SCDigest Says:

The analysis found that there is an elevated risk in 25 of the 50 largest global economies, making companies sourcing from, operating in, or exporting to those countries vulnerable to a variety of costly disruptions. What do you say? Send us your comments here

Insurer Aon Corp, in partnership with research firm Oxford Analytica, recently released its annual Political and Economic Risk Map for 2008, finding that economic, political and supply chain risks are again on the rise.

The analysis found that there is an elevated risk in 25 of the 50 largest global economies, making companies sourcing from, operating in, or exporting to those countries vulnerable to a variety of costly disruptions. The researchers define elevated risk as any country that has a risk rating of Medium-Low, Medium, Medium-High or High.

A pdf version of the map is available from SCDigest (Political and Economic Risk Map for 2008 – note, it’s a 5 megabyte file). A larger printed version of the map may be requested from Aon.

The map shows virtually every country in the world, and uses symbols to illustrate what risks are significant for that county. Risk categories include economic; exchange transfer; strike, riot and civil commotion; war; terrorism; sovereign non-payment; legal and regulatory; political interference; and supply chain vulnerability. It provides a visual overview that can help companies explore in more depth the potential risks faced in a global supply chain.

(Global Supply Chain and Logistics Article - Continued Below)

(Global Supply Chain and Logistics Article - Continued)

According to Bryan Squibb, managing director of Aon Trade Credit Global, “The global risk management community is increasingly concerned about supply chain risks in Asia.” Factors such as potential political conflict in China, the still looming threat of an avian flu outbreak, and potential actions by Western governments that could limit imports from China as a result of perceived product quality issues in Chinese manufactured goods are among the factors leading to greater concern about Asian supply chain links.

Oil in Unstable Hands

The analysis also noted the rising risks in terms of the world’s oil supply, which creates political, economic and supply chain risks.

“Most of the world's oil reserves are held by government-controlled oil companies,” Aon notes. “As the global demand for oil continues to grow in 2008, most of the demand will continue to be met by state-owned companies in nations with elevated levels of political and economic risk.”

The 25 countries out of the top 50 economies that have elevated risk, according to the study, are as follows:

"I have noted a significant increase in the number of CEOs, CFOs and chief risk officers who are seeking a greater understanding of how their businesses are at risk in an increasingly complex global environment versus their primary risk concerns 10 years ago," Squibb added.

Are supply chain risks really increasing – or just awareness of them? Are high-level analyses like this a useful starting point for assessing risk levels? Let us know your thoughts at the Feedback button below.