Australia has been named one of the top-ranked countries in the 2020 FM Global, due to its capacity for business environments to rebound from economic events.
At a time when the world has been shocked by a pandemic and resilience has never been more critical, Australia has been found to possess a strong foundation for a robust post-pandemic business recovery.
Australia is ranked 17th overall in this year’s Global Resilience Index, published by FM Global, one of the world’s largest commercial property insurers, ranking nearly 130 countries and territories by the resilience of their business environments.
It provides companies with objective information about countries’ economic, risk quality and supply chain resilience, that are factors that can affect businesses’ ability to rebound from COVID-19.
Australia was recognised for its strength in a number of drivers related to supply chain resilience including control of corruption (ranked 14), supply chain visibility (ranked 22) and quality of infrastructure (ranked 31).
FM Global Australia said these rankings highlight the quality of the country’s transport, telephony and energy infrastructure, as well as the country’s ability to track and trace consignments across its supply chain.
Lynette Schultheis, Operations Manager, FM Global Australia, said the pandemic has brought many businesses to a standstill and caused significant disruption and uncertainty to the future of global economies.
“Australia has not been immune. However, it is encouraging to see that steps taken to date to mitigate our risk across a number of key areas have placed the countries’ businesses on a strong footing, as they look to recover from this unprecedented economic and operational shock,” she said.
Managing supply chain disruption
Where there may be cause for concern is for the many businesses who have extended their supply chains into neighbouring countries across Asia to reduce costs and increase competitiveness.
In addition to supply chain disruption and operational risk that many local businesses have been subject to as a result of the pandemic, a number of major manufacturing hubs in the Asia Pacific region ranked poorly for a number of drivers of supply chain resilience.
FM Global Australia said Australia’s largest trading partner, China, significantly improved its corporate governance from last year’s ranking (from 98 to 74), indicating greater scrutiny of auditing and accounting standards, conflict of interest regulation and shareholder governance.
However, the country’s quality of infrastructure dropped slightly (from 31 to 38), indicating possible vulnerabilities in this integral aspect of global supply chain resilience.
Lynette said the globalisation of many industries such as manufacturing has created a level of complexity which can leave business leaders unprepared for significant disruption in supply chains, and for the potential financial, legal and reputational risks that result.
“This pandemic should reinforce the importance of striking a better balance between cost-effectiveness and a diversified supply chain,” she said.
“This starts with taking into consideration all the potential risk factors involved with a given business partner and country-level resilience is a big part of that.”
Supply chain risk awareness
Norway continues to occupy the top spot in the 2020 Resilience Index due to its strong economic productivity, a stable political environment, low corruption, high natural hazard risk quality and robust corporate governance.
While the country ranks first overall, it ranked below average for inherent cyber risk (ranked 83), highlighting that no country is entirely resilient.
FM Global Australia said the Resilience Index stands as a reminder that more conventional business risks, including cyberattacks, continue to threaten operations and overall value, and should not be overlooked amid the response to the pandemic.
Australia’s overall resilience ranking was held back by its inherent cyber risk (ranked 48), oil intensity (ranked 93) and corporate governance (ranked 41).
“This reinforces the importance of business leaders assessing their level of exposure to other risk factors and developing clear steps to mitigate potential disruption,” FM Global Australia said in a statement.
“Business leaders must also remain alert to the natural hazard exposure of its regional trading partners which has the potential to cause significant disruption to extended supply chains,
“It’s clear that businesses must look more broadly at their continuity plans and use data-driven tools to develop more robust strategies.”