Tue | Aug 14, 2018

Cedric Stephens | Response to chaotic disruptions a test of resilience

Published:Sunday | December 10, 2017 | 12:00 AM
In this September 27, 2017 photo, Marlene Ojeda carries her son Esaid Marrero through the Rio San Lorenzo de Morovis, after the bridge that crosses the river was swept away by Hurricane Maria, in Morovis, Puerto Rico. The hurricane brought chaos to the region, and the recovery efforts have been testing the economic resilience of various countries, even in Puerto Rico, which is a territory of the world's only super power, the United States.

What is economic resilience? This was one of the questions I was asked in relation to my November 30 column, 'Mitigating natural disaster risk and enhancing economic resilience'.

The penny dropped after I reread it. The article assumed that readers were familiar with the term. I will try to fix that error today. I'll also share information that readers can use to compare how Jamaica stacks up against other countries in terms of economic resilience.

Gartner Inc describes itself on its website as "the world's leading research and advisory company". In 2002, one of its analysts, Michael A. Bell, wrote about "The Five Principles of Organizational Resilience" in which he explained the term. His comments were made in the context of business enterprises. It can also be applied to countries as the International Monetary Fund's recent reviews of the Bahamian and Jamaican economies show.

"We have entered an era of global economic and geopolitical uncertainty," Bell wrote. "It is not just the terrorist acts of September 11 [2001], but a decade of unprecedented change, wrenching economic instability and business discontinuities that demand organisational agility and organisational resilience. What exactly is organisational resilience? It is an enterprise's capability to respond rapidly to unforeseen change, even chaotic disruption. It is the ability to bounce back - and, in fact, to bounce forward - with speed, grace, determination and precision."

The uncertainty and speed of disruption have increased during the last 15 years.

Pessimism, defeatism, despair and 'fight gainst' - to use the language of the streets - are the opposites of resilience. The September 26 Miami Herald captures the absence of economic resilience of a neighbouring island this way: "After Hurricane Maria, the government ... was overwhelmed. Crushed by debt and slammed by two back-to-back storms, Puerto Rico's ability to return to any semblance of normality appeared months and months away."

Hurricane Matthew, a late season Category 5 hurricane, slammed into southern Haiti killing 900 persons in October 2016, leaving it 90 per cent destroyed, according to a BBC report.

What would happen if Jamaica faced two back-to-back storms in quick succession or a direct hit from a Category 5 hurricane? The ability of a country 'to respond quickly, decisively and effectively to chaotic disruption, unforeseen and unpredictable forces', like hurricanes and earthquakes, is imperative in the 21st century. This was one of the IMF's messages.

Can Jamaica's economic resilience be measured? How does it compare with those of other countries?




The World Bank collects and publishes information on global development indicators. They are compiled from officially recognised international sources and used by government officials. The topics covered include agriculture and rural development, aid effectiveness, climate change, economy and growth, education, energy and mining, environment, external debt, financial sector, gender, health, and infrastructure.

Other entities devise different tools to make other kinds of comparisons. For example, Transparency International, an institution founded in Germany, developed a tool, a corruption perception index that is widely used to measure corruption.

Four years ago, a 190-year US mutual insurance company, FM Global, created a Global Resilience Index. The index "ranks 130 countries and territories by their enterprise resilience to disruptive events such as cyber attacks and natural disasters" and "aims to help business executives to site facilities, select suppliers, evaluate established supply chains and identify customers who may be vulnerable".

FM Global uses "twelve drivers of operational resilience which are grouped into three factors: economic, supply chain and risk quality. These combine to form the composite index. Scores are bound on a scale of 0 to 100, with 0 representing the lowest resilience and 100 being the highest resilience".

Sweden, according to the index, has above-average resilience. "This is due in part, to its lower-than-average exposure to hazards such as windstorms, flood and earthquakes. On the other hand, flood-prone Bangladesh, a major manufacturing hub for apparel and textiles, ranks towards the bottom ... For companies with global supply chains, Germany, a major exporter and importer, ranks near the top in resilience, driven in part by its strong ability to demonstrate where parts, components or products are in transit. Russia ranks below average in this respect.

"Wealthy Switzerland occupies the number-one ranking. This reflects high scores for its infrastructure, local supplier quality, political stability, control of corruption and economic productivity. Hurricane-ravaged Haiti ranks at the bottom of the index. This is due in part to its high natural hazard exposure and poor economic conditions. Other drivers of resilience that form the index include: productivity, political risk, oil intensity, exposure to natural hazard, natural hazard risk quality, fire risk quality, control of corruption, quality of infrastructure and quality of local suppliers" (See table for country rankings).

The developers of the index say it is a work in progress. Notably, it excludes the Gulf states, including Florida. Puerto Rico is also not included.

However, when one looks at the bigger picture and couples the data it contains with the advice that IMF offered, mitigating disaster risk and enhancing economic resilience should form an important part of the national agenda.

- Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com