Adedapo Adesanya
By Adedapo Adesanya
Fitch Solutions has launched a revamped and enhanced Operational Risk service which will provide an immediately accessible alternative to the now-discontinued World Bank Doing Business report.
Business Post had reported that the Bretton Wood Institution discontinued the publishing of its Ease of Doing Business report after 18 years due to irregularities. The report measures regulations directly affecting the ease of doing business in 190 countries.
An independent investigation document had found that Ms Kristalina Georgieva, who is now the managing director of the International Monetary Fund (IMF) and served as the bank’s chief executive officer from 2017 to 2019 had applied “pressure” to have China ranked more favourably.
The remodelled Fitch Solutions Operational Risk Index provides an objective and data-driven assessment of the ease of doing business across 201 markets, enabling users to quantify and compare business environment risks to their investments, supply chains and day-to-day operational activities.
The Operational Risk Index is also used in Fitch Ratings Bank Rating Criteria to derive an implied Operating Environment Score for a given jurisdiction, replacing the World Bank Doing Business data that was previously used as part of the bank rating methodology.
The index, which was developed by the Fitch Solutions Country Risk and Industry Research team, is underpinned by 90 input metrics that are updated quarterly and was designed with full transparency in mind.
Each of the 201 markets covered is given a headline Operational Risk score out of 100 to allow for direct market-by-market benchmarking and comparison.
However, the index’s explanatory power lies in its ability to capture and quantify operational challenges via a focus on the four underlying elements of risk that combine to give the headline score: Crime and Security, Logistics, Trade and Investment, and Labour Market Risk.
It will be made available via Fitch Solutions’ online platform, Fitch Connect and users can use interactive charting capabilities and proprietary data download tools to access and fully appraise all of the data contained in each of the four underlying risk categories.
The index captures metrics that go beyond those that were previously included in the now discontinued World Bank Doing Business report.
In addition to the index and the data, 370 new reports will be released to provide qualitative analysis. The reports align four main areas of risk captured by the Index under the headings Crime, Defence and Security; Logistics and Freight Transport; Trade and Investment and Education and Labour.
The company noted that analysis will include, but not be limited to, coverage of crime, cyber and conflict risk; economic openness; labour costs, availability and skills; access to utilities and transport networks.
Speaking on this, Mr Nick Morgan, Managing Director and Head of Country Risk and Industry Research at Fitch Solutions, said: ‘’This is a timely opportunity to introduce the Operational Risk Index to clients who may have previously used the World Bank’s Doing Business data and analysis.”
“The Operational Risk Index gives a comprehensive picture of business environment risks across 201 markets, giving users access to a more agile, extensive and transparent range of comparable metrics.
“Quarterly updates of the 90 underlying metrics for each market mean that the Index and reports can be used to support a range of business activities, including risk benchmarking, business climate and supply chain analysis, investment decision making.
“The inclusion of the Index in the Fitch Ratings Bank Rating Criteria is in line with our commitment to ensuring our methodologies are transparent and robust,” he said.
