The ease of doing business index ranks countries based on the conduciveness of their regulatory environments to business operations, with lower rank indicating favourable conditions. The data come from the World Bank’s Doing Business project, which measures business regulations and their enforcement across the globe. Efficient, accessible, and easily implemented rules and regulations lead to healthier economies and low risk of doing business. Countries scoring lower in the rankings are indicative of onerous regulations, high tax burdens, low levels of legal protection of property, or inflexibility of employment regulations.
Understanding the business environment in which a company operates helps risk managers better prepare for the challenges they may face. For example, companies expanding their operations to places like New Zealand, Singapore, or Denmark, which score highest in the rankings, will face fewer regulatory risks than Somalia, Eritrea, or Venezuela, which fall at the bottom of the list. In those countries, risk managers will be needed to mitigate the potential damage of conducting operations in an unfavourable business climate.
In 2017, Africa, South America, and South Asia contain the highest concentration of countries falling low on the index. Risk managers of companies with extensive supply chains or other operations within these regions will manage a larger litany of exposures than organisations who conduct business in low-scoring Europe and North America.