According to a recent report powered by Dun & Bradstreet, there is a general unease about the state of the global economy with its increase in operational risk and the Chinese slowdown highlighting emerging market vulnerabilities.
Findings unveils that supply chain risk in Asia Pacific continued to rise due to worsening economic conditions in New Zealand, Australia and China. Sub-Saharan Africas supply chain risks fell slightly, though underlying risk trend continues to deteriorate.
Though Irans re-entry into global supply chains encourages optimism, supply chain risk in the Middle East and North Africa (MENA) remains in the high risk category.
To determine the CIPS Risk Index, powered by Dun & Bradstreet, a Dun & Bradstreet team of in-house economists, data analysts and contributors analyzed 132 countries across nine risk and opportunity categories. The index score worsened slightly in the last quarter of 2015 to 79.3 from 79.1 in the third quarter of 2015. While some regions, including the EU, have improved since mid-2015, emerging markets now demonstrate more vulnerability.
In China, risk is related to regions where industry has considerable over-capacity and local governments have propped up employment through their influence over local banks, raising both the risk of corporate defaults in the longer term, and higher credit risk. Supply chain risk was also increased in New Zealand, where Dun & Bradstreet downgraded the country risk outlook for the second time in 2015, driven by a 40% fall in global dairy prices (resulting in dairy prices reaching their lowest level since 2008). A too-slow recovery of prices in 2016 could result in a further decline in land prices (up to 10%) and an 8% rise in non-performing loans.
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