Business report

Fitch launches index to replace World Bank’s Doing Business report

By Adedapo Adesanya

Fitch Solutions has launched a revamped and improved operational risk service that will provide an immediately accessible alternative to the now discontinued World Bank’s Doing Business report.

Business post had reported that the Bretton Wood Institution halted publication 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 investigative document had revealed that Ms Kristalina Georgieva, who is now managing director of the International Monetary Fund (IMF) and served as the bank’s chief executive from 2017 to 2019, exerted ‘pressure’ for China to be listed more favorably.

The revamped Fitch Solutions Operational Risk Index provides an objective, data-driven assessment of the ease of doing business in 201 markets, allowing users to quantify and compare business environment risk to their investments, supply chains and their daily 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’s Doing Business data that was previously used as part of the bank rating methodology.

The index, which was developed by the country and industry risk research team at Fitch Solutions, is underpinned by 90 entry metrics that are updated quarterly and has been designed with full transparency.

Each of the 201 markets covered is assigned an overall operational risk score out of 100 to enable direct benchmarking and comparison on a market-by-market basis.

However, the explanatory power of the index lies in its ability to capture and quantify operational challenges by focusing on the four underlying risk elements that combine to give the overall score: crime and security, logistics, trade and investment, and labor market risk.

It will be made available through Fitch Solutions’ online platform, Fitch Connect, and users will be able to use interactive charting capabilities and proprietary data download tools to access and fully assess all of the data contained in each of the four underlying risk categories.

The index captures measures that go beyond those previously included in the now discontinued World Bank’s Doing Business report.

In addition to the index and 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, Defense and Security; Logistics and transport of goods; Trade and Investment and Education and Labor.

The company noted that the analysis will include, but not be limited to, coverage of crime, cybersecurity and conflict risks; economic openness; labor costs, availability and skills; access to public services and transport networks.

Speaking on the subject, Mr. Nick Morgan, Managing Director and Head of Country and Industry Risk Research at Fitch Solutions, said: “This is a timely opportunity to present the Operational Risk Index to clients who may have already used World Bank Doing Business data and analysis”.

“The Operational Risk Index provides a comprehensive picture of business environment risks across 201 markets, giving users access to a more agile, expansive 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 l chain analysis, investment decision making.

“Inclusion of the index in Fitch Ratings Bank’s rating criteria is in line with our commitment to ensure transparency and robustness of our methodologies,” he said.