Australia one of the most resilient countries globally, Asia falters

Commercial property insurer, FM Global, releases 2019 Resilience Index – the only global ranking of countries by the resilience of their business environments

Sydney, 22 May 2019 — FM Global, one of the world’s largest commercial and industrial property insurance providers, has today 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 forits 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. Those countries that ranked poorly in that regard include many major global manufacturing hubs as illustrated in the table below:

		Rank
Country	Overall Rank	Supply Chain Visibility  The ability to track and trace consignments across a country’s supply chain	Control of Corruption The perceived extent to which public power is exercised for private gain, including both petty and grand forms of corruption, as well as capture of the state by elites and private interests	Quality of Infrastructure The quality and extension of transport infrastructure (road, rail, water and air) and utility infrastructure	Corporate Governance The strength of auditing and accounting standards, conflict of interest regulation and shareholder governance
Bangladesh	108	82	111	109	97
Cambodia	114	107	127	111	109
China region 1	74	29	70	31	98
China region 2	76	29	70	31	98
China region 3	68	29	70	31	98
India	59	42	67	67	10
Sri Lanka	81	81	81	69	64
Thailand	73	37	78	64	21
Vietnam	88	38	95	78	104

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. 

Global leaders

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. 

2019 FM Global Resilience Index Annual Report and Methodology [Download Here]

Executive Summary [Download Here]

Frequently Asked Questions[Download Here]

Infographic [Download Here]

About FM Global
Established nearly 200 years ago, FM Global is a mutual insurance company whose capital, scientific research capability and engineering expertise are solely dedicated to property risk management and the resilience of its client-owners. These owners, who share the belief that the majority of property loss is preventable, represent many of the world’s largest organisations, including one of every three Fortune 1000 companies. They work with FM Global to better understand the hazards that can impact their business continuity in order to make cost-effective risk management decisions, combining property loss prevention with insurance protection. 
 

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