A Fractured Picture: Deconstructing the US Ranking
In a world defined by volatility, the concept of business resilience has shifted from a boardroom buzzword to a critical determinant of long-term success. For decades, the United States has been viewed as a bastion of economic stability and a prime location for investment. However, the latest findings from the 2024 FM Global Resilience Index paint a more nuanced and challenging picture, revealing that as a whole, the nation’s reputation as a uniformly safe bet for business may be eroding. The comprehensive report, which ranks 130 countries and territories on the resilience of their business environments, shows a stark divergence across the U.S., with only one of its three designated zones cracking the top 10.
While the central U.S. region secured a respectable 8th place globally, the eastern and western zones fell to 15th and 21st, respectively. This fractured ranking underscores a critical reality for modern enterprise: national borders are no longer sufficient proxies for risk assessment. The data suggests that exposure to escalating natural hazards like hurricanes, wildfires, and earthquakes, combined with varying infrastructure quality, is creating significant pockets of vulnerability within the world’s largest economy. As global leaders like Denmark, Luxembourg, and Switzerland solidify their positions at the top of the index, the performance of the U.S. serves as a compelling case study in the complex interplay between economic strength, risk quality, and supply chain integrity in the 21st century.
Understanding the 2024 FM Global Resilience Index
To fully grasp the implications of the U.S. rankings, it is essential to understand the purpose and methodology behind this influential annual report. The FM Global Resilience Index is not merely an academic exercise; it is a strategic decision-making tool used by C-suite executives, risk managers, and supply chain strategists worldwide to navigate the complexities of global operations.
What is the Index?
Published by FM Global, a leading commercial property insurer, the Resilience Index provides an annual, data-driven ranking of the business resilience of 130 countries and territories. Its primary objective is to help organizations assess risk and make informed choices about site selection, supply chain sourcing, and market prioritization. In an era of profound disruption—from pandemics and climate change to geopolitical conflicts and economic shocks—the index offers a quantitative framework for understanding and mitigating potential business interruptions.
The rankings are derived from a wealth of public and private data, combining objective metrics with FM Global’s own proprietary insights gleaned from decades of property risk engineering experience. By synthesizing this information, the index provides a holistic view of the potential vulnerabilities a business might face when operating in a specific region, enabling a more proactive and strategic approach to risk management.
The Three Pillars of Resilience: Methodology Explained
The index’s robust methodology is built upon three core pillars, each composed of several underlying drivers. The final ranking for each country is a composite score reflecting its performance across these interconnected dimensions.
1. Economic Factors: This pillar assesses the macroeconomic health and stability of a country. It includes drivers such as:
- GDP per Capita: A measure of economic productivity and wealth, which often correlates with the resources available for investment in infrastructure and risk mitigation.
- Political Risk: Evaluates the stability of the government, the rule of law, and the potential for politically motivated disruptions to business operations.
- Oil Intensity: Measures a country’s economic vulnerability to fluctuations in global oil prices. Lower intensity suggests greater energy independence and economic stability.
- Urbanization Rate: High rates of urbanization can concentrate risk, straining infrastructure and increasing the potential impact of a single disruptive event.
2. Risk Quality Factors: This is a critical pillar that directly reflects FM Global’s expertise in property loss prevention. It evaluates a country’s exposure to and management of physical risks, particularly natural hazards and fire. Key drivers include:
- Natural Hazard Exposure: Quantifies the risk from events like earthquakes, floods, and windstorms. This is a primary differentiator for the three U.S. zones.
- Natural Hazard Risk Quality: Assesses the prevalence and enforcement of robust building codes and standards designed to withstand natural perils.
- Fire Risk Quality: Measures the quality of fire prevention standards, practices, and enforcement within a country.
3. Supply Chain Factors: This pillar examines the logistical and governance elements that underpin the smooth flow of goods and services. It includes:
- Control of Corruption: A low level of corruption is crucial for transparent and reliable business dealings.
- Infrastructure Quality: Evaluates the condition and reliability of a country’s transport, communication, and utility networks.
- Corporate Governance: Assesses the strength of investor protections and corporate accountability standards.
- Supply Chain Visibility: Measures the ability of businesses to track and manage their supply chains effectively within a country, a factor of growing importance in a globally interconnected economy.
A Tale of Three Americas: Analyzing the US Zones
The decision by FM Global to divide the United States into three distinct zones—USA 1 (Central), USA 2 (East), and USA 3 (West)—is a direct acknowledgment that a single national ranking would obscure critical regional differences. This sub-national analysis reveals a country with vastly different risk profiles, driven primarily by exposure to natural hazards.
The Resilient Heartland: Why USA 1 (Central) Ranks in the Top 10
Securing the 8th spot globally, the Central U.S. zone stands as the nation’s most resilient business environment. Its high ranking is a testament to several key strengths. Economically, the region is robust, and it scores well on indicators like political stability and corporate governance, which are uniform across the nation. However, its primary advantage lies in the Risk Quality pillar.
The Central zone has a significantly lower exposure to catastrophic natural perils compared to its coastal counterparts. It is largely insulated from the direct impact of major hurricanes and the most severe seismic activity that threatens the West Coast. While the region is susceptible to tornadoes, hailstorms, and riverine flooding, the scale and predictability of these events are often more manageable from a property risk perspective. This lower inherent risk, combined with strong building codes in many areas and high-quality infrastructure supporting its role as a national logistics and manufacturing hub, makes the Central U.S. an attractive location for businesses prioritizing operational stability.
Coastal Concerns: The Challenges Facing USA 2 (East)
Ranked 15th, the Eastern U.S. zone presents a more complex risk landscape. This region, encompassing major economic centers from the Eastern Seaboard to the Gulf Coast, faces a potent combination of natural hazards. Its most significant vulnerability is its high exposure to Atlantic hurricanes and associated storm surge and flooding. The increasing intensity of these storms, widely attributed to climate change, poses a direct and growing threat to coastal infrastructure, manufacturing facilities, and critical ports.
Furthermore, parts of the East contain some of the nation’s oldest infrastructure, which can be more susceptible to failure during extreme weather events. The high population density in metropolitan areas like New York, Miami, and Boston concentrates risk, meaning a single event can have a disproportionately large economic impact. While the region shares the nation’s overall economic strengths, its elevated natural hazard exposure is the primary factor pulling its resilience score down below the top tier.
Under Pressure: Natural Hazards Define USA 3 (West)
The Western U.S. zone, at 21st in the global rankings, faces the most formidable natural hazard challenges in the country. The region’s resilience score is heavily impacted by two dominant perils: earthquakes and wildfires. The ever-present threat of a major seismic event along fault lines like the San Andreas requires exceptionally stringent building codes and preparedness measures, which, while often in place, cannot eliminate the risk of massive disruption.
In recent years, the threat of wildfire has escalated dramatically, expanding in frequency, size, and duration. These events not only destroy property but also lead to widespread power outages, transportation route closures, and poor air quality, causing significant and prolonged business interruption. Compounding these issues are ongoing water scarcity and drought challenges, which impact agriculture, manufacturing, and a host of other industries. This potent cocktail of high-impact natural hazards firmly places the West as the most challenging business environment of the three U.S. zones from a resilience perspective.
The Global Leaders: What Sets the Top Performers Apart?
Examining the countries that consistently dominate the top of the Resilience Index provides valuable insights into the characteristics that define a truly resilient business environment. The 2024 list is led by Denmark (#1), followed by Luxembourg (#2) and Switzerland (#3), with other Western European nations like Germany, Sweden, and Finland also featuring prominently.
Denmark Leads the Way: A Blueprint for Resilience
Denmark’s ascent to the top spot is illustrative of a holistic approach to resilience. The country excels across all three pillars. It boasts a strong, stable economy with low corruption and high marks for corporate governance. Its infrastructure is modern, well-maintained, and designed to high standards. Crucially, Denmark benefits from a relatively low natural hazard exposure, but it doesn’t rely on that alone. The nation has a strong culture of proactive risk management, with excellent fire safety standards and robust building regulations.
This combination of economic stability, high-quality infrastructure, strong governance, and a low-risk physical environment creates a predictable and secure landscape for business operations. It minimizes the chances of unexpected disruptions, allowing companies to focus on growth and innovation rather than constant crisis management.
Common Threads of the Top Tier
Beyond Denmark, the leading nations in the index share several common traits that distinguish them from lower-ranked countries, including parts of the U.S. These include:
- Political and Economic Stability: A predictable political environment and transparent regulatory framework are foundational.
- Investment in Infrastructure: Top-ranked countries consistently invest in maintaining and upgrading their transportation, energy, and digital networks.
- Commitment to Risk Quality: Strong, uniformly enforced building codes and a societal emphasis on fire prevention and safety are non-negotiable.
- Low Corruption: A transparent and accountable governance structure fosters trust and reduces the hidden costs and risks of doing business.
- Geographic Advantage: While not a controllable factor, many of the top nations have lower exposure to catastrophic natural events like earthquakes, typhoons, and large-scale wildfires. However, they actively manage the risks they do face, such as flooding in the Netherlands or winter storms in Scandinavia.
Key Risks and Emerging Trends Shaping Global Resilience
The 2024 FM Global Resilience Index does more than just rank countries; it highlights the macro trends that are reshaping the global risk landscape. For business leaders, understanding these shifts is critical for building future-proof strategies.
The Unmistakable Impact of Climate Change
Climate risk is no longer a future-tense problem; it is a present-day reality profoundly influencing business resilience. The lower rankings of the U.S. East and West zones are a direct reflection of this trend. The increasing frequency and severity of hurricanes, wildfires, floods, and droughts are testing the limits of existing infrastructure and emergency preparedness. Countries and companies that fail to invest in climate adaptation—such as strengthening infrastructure, updating building codes for future conditions, and managing water resources—will see their resilience scores and operational viability decline.
Geopolitical Tensions and the Fragility of Supply Chains
The era of hyper-efficient, just-in-time global supply chains has given way to a new reality defined by geopolitical friction. The index’s supply chain pillar, which measures factors like political risk and infrastructure, is gaining importance. Ongoing conflicts, trade disputes, and rising nationalism are forcing companies to re-evaluate their sourcing and manufacturing footprints. The pandemic exposed the vulnerabilities of over-reliance on single-source suppliers or specific geographic regions. Consequently, businesses are increasingly prioritizing resilience and redundancy over pure cost efficiency, seeking to build more diversified and transparent supply chains in politically stable regions.
The Evolving Economic Landscape
While economic fundamentals like GDP remain important, new economic pressures are emerging. High inflation, rising interest rates, and the potential for recession in major economies create a challenging environment. Countries with high levels of debt or economies overly dependent on a single industry (like oil) are more vulnerable to these shocks. This economic uncertainty puts pressure on both public and private investment in resilience-building initiatives, creating a potential feedback loop where economic fragility exacerbates physical and supply chain risks.
Strategic Imperatives: What This Means for Business Leaders
The findings of the FM Global Resilience Index are a clear call to action for corporate decision-makers. The data provides not just a ranking, but a roadmap for more intelligent and resilient business strategy.
Beyond Borders: Granular Risk Assessment is Key
The primary takeaway from the fractured U.S. ranking is that a national-level view of risk is dangerously simplistic. Companies must adopt a more granular, sub-national approach to site selection and supply chain design. A facility in Kansas faces a profoundly different risk profile than one in California or Florida. Leveraging data from tools like the Resilience Index allows organizations to make these distinctions and allocate capital and resources more effectively, placing critical operations in more resilient locations and applying more stringent risk mitigation measures in high-vulnerability areas.
The Rising Cost of Complacency
Operating in a lower-ranked, higher-risk zone has direct financial consequences. These can include higher commercial property insurance premiums, increased capital expenditure requirements to fortify facilities against natural hazards, and a greater likelihood of suffering costly business interruption losses. Beyond these direct costs, a major disruption can lead to significant reputational damage, loss of market share, and strained customer relationships. The index demonstrates that proactively investing in resilience is not a cost, but a strategic investment in protecting the bottom line and ensuring long-term continuity.
A Call for Proactive Investment in Resilience
Improving resilience requires a concerted effort from both the public and private sectors. For business leaders, this means moving beyond basic business continuity plans and embedding a culture of risk management throughout the organization. This includes:
- Investing in Property Loss Prevention: Implementing robust engineering solutions to protect facilities from fire, flood, wind, and seismic events.
- Diversifying Supply Chains: Reducing reliance on single suppliers or geographic regions to minimize the impact of localized disruptions.
- Conducting Scenario Planning: Stress-testing operations against a range of potential disruptions, from natural disasters to geopolitical events.
- Engaging with Public Partners: Advocating for and supporting community-level resilience initiatives, such as improved infrastructure and updated building codes.
Conclusion: Navigating a New Era of Risk
The 2024 FM Global Resilience Index delivers a clear and powerful message: in an increasingly uncertain world, resilience is the ultimate competitive advantage. The complex and divided ranking of the United States serves as a microcosm of the global landscape, where economic might alone is no longer a guarantee of operational stability. The growing influence of climate-related natural hazards, geopolitical instability, and supply chain vulnerabilities demands a more sophisticated and data-driven approach to risk management.
For business leaders, the path forward is not about avoiding risk entirely—an impossible task in a globalized economy. Instead, it is about understanding it, quantifying it, and making deliberate, strategic choices to mitigate it. By leveraging insights from the Resilience Index, organizations can build stronger, more adaptable, and more durable enterprises capable of not only surviving the next disruption but thriving in an era defined by change.
