Report: Supply Chain Risk Edges Toward Record Level

The latest assessment of the global supply chain by the Chartered Institute of Procurement and Supply showed an increase in risk for the third consecutive quarter.

The third quarter CIPS Risk Index of 81.6 was up from 80.8 in the second quarter and 79.3 in the final three months of 2015.

The index is generated by aggregating monthly scores — compiled by analysts from business services firm Dun & Bradstreet — across nine categories in 132 nations.

The report said that although few countries were downgraded in the latest quarter, those that were included major economies such as the U.K., which voted to leave the European Union early this summer, and Turkey, which continues to deal with the fallout from a failed coup attempt in July.

Analysts warned that growth remains stagnant in many major economies and is threated by political uncertainty and "forces of de-globalization."

"With international trade deals under threat around the world, [supply chain managers] must be as aware of political risks as they are of natural disasters and economic hardship," said CIPS economist John Glen.

North America's risk level remained unchanged in the latest quarter, and the report found that although the U.S. economy is expected to grow in the second half of the year, "structural changes" triggered by the Great Recession limit its long-term potential.

Risk increased, meanwhile, in most other regions tracked by the group. Western and Central Europe and Eastern Europe and Central Asia were impacted by the Brexit vote and Turkish coup, respectively, while Latin America was hindered by ongoing recessions in several nations.

The Middle East and North Africa remains plagued by political instability — and in many places open warfare — as well as weak oil prices, and Sub-Saharan Africa was affected by low domestic demand, political issues and drought.

The Asia-Pacific region was the only one tracked by the report to show improvement due to strong performances by Australia and Vietnam.

"The failure of developed economies to embark on a robust recovery, and the slowdown in emerging markets, are reflected in a still high-risk global operating environment," said Dun & Bradstreet lead economist Bodhi Ganguli.