Running a business is always risky and often evolves dealing with complex supply chains across the world, especially in a trading country like Australia. Supply chain disruption can be one of the leading causes of business volatility in today’s global economy.

In light of this, FM Global, a UK-based insurance company, has released its annual Resilience Index that ranks the business resilience of 130 countries. It is designed to help executives evaluate and manage potential disruption to a country’s supply chains.

Australia was ranked 14th on the list of countries most resilient to disruptions in the supply chain at 86.9 on the scale. This is just below New Zealand’s ranking with a score of 87.2. Last year, Australia ranked fourth on the index and has fallen in all three of the broad categories used by the index.

Norway led the table as the most resilient with Switzerland, Netherlands, Ireland and Luxembourg rounding out the top five.

The survey analyses nine key drivers of supply chain risk and groups them into three categories: economic, risk quality and supply chain factors. These are then combined to form the composite index, giving a score between 0 and 100.

A country’s exposure to conflict and political unrest, terrorism, corruption, its vulnerability to oil shortages and price shocks, the prevalence and severity of natural disasters, extreme weather are all taken into account. The index also considers maturity in risk management capabilities, investment in risk management, infrastructure, and the quality of local suppliers.

An enduring drought, damaging cyclones and bush fires, coupled with Australia’s vulnerability to changes in the price of our mineral exports, means that Australian businesses face many potential disruptions to the supply chain.

Recent cyclones in Queensland and Northern Territory show that when a natural disaster hits, it can stop a business in its tracks. Because the risks to supply chains caused by a disaster can have a knock-on effect to the success of your company, having business insurance can go a long way in protecting you if something does go wrong.