FM Global recently released the 2019 edition of the FM Global Resilience Index to help business decision makers across the globe make more informed strategic choices when it comes to their enterprise resilience.
This year’s Index reveals Australia is ranked 17th overall out of 130 countries and territories, according to the resilience of its business environment. The rankings are derived from 12 economic, risk quality and supply-chain related measures to address business concerns around such things as natural hazards, cyber threats, political and economic risk. The complete data is available publicly at www.fmglobal.com/resilienceindex.
Australia was recognised for its high natural hazard risk quality (ranked 15th) due to the quality and enforcement of its building codes with respect to natural hazards like floods and bushfires. It ranked eighth for the quality of its fire risk management due to the quality and enforcement of building codes with respect to fire-based design.
The country was also recognised for higher control of corruption (ranked 14th) and supply chain visibility (ranked 22nd).
Australia’s overall rank in the Index was held back by its inherent cyber risk (ranked 62nd), placing the country towards the bottom of the second quartile. This reinforces the need for business leaders to assess their level of cyber exposure as well as develop clear, actionable steps to mitigate cyber risk and avoid business interruption.
Managing risk in the global supply chain
Today, most Australian-based businesses tap supply chains that extend far beyond Australia, predominantly into neighbouring countries located in Asia.
Four contributors to the resilience of a country’s business environment include supply chain visibility, control of corruption, quality of infrastructure and corporate governance.
Lynette Schultheis, Operations Manager at FM Global said, “While many Australian-based businesses have moved their supply chains into Asia to make them more competitive, few have mapped the vulnerabilities that their supply chains are now exposed to. This means too few businesses understand the potential political, financial, legal and reputational risks they may have unintentionally exposed themselves to and now must face and overcome”.
Furthermore, the potential for severe disruption across global supply chains from natural disasters such as typhoons, floods and bushfires is considerable. Key manufacturing hubs located in Asia, such as Bangladesh and Sri Lanka, both are ranked equally (#112) for natural hazard exposure. Vietnam ranked last (#130) for natural hazard risk quality, due to poorer quality and enforcement of building codes with respect to natural hazard-resistant design.
“The FM Global Resilience Index is designed to provide business leaders, including chief financial officers, with powerful intelligence to support their decisions surrounding operational resilience and effective risk management. It enables businesses to decide where to site new facilities or expand existing ones, extend their supply chains, evaluate established supply chains and identify potentially vulnerable customers. FM Global’s experience indicates that a lack of resilience can have far-reaching, long-lasting effects on business value and performance”, Schultheis added.
Overall, Norway and Denmark ranked first and second, respectively, in the 2019 FM Global Resilience Index. Norway’s top spot is attributable to its quality of corporate governance (ranked sixth) and high control of corruption (ranked second), economic productivity (ranked sixth) and low political risk (ranked eighth). Denmark was held back by its inherent cyber risk (ranked 95th). This is the sixth consecutive year of the annual FM Global Resilience Index.
Download the 2019 FM Global Resilience Index Annual Report here.