Sight Unseen

ARTICLE

Sight unseen:
managing out-of-sight risks in Australia

Australian businesses are facing data security breaches, extreme weather events and trade risks—all while 64% say poor-quality data is their biggest challenge in risk management. Without data-driven insights, can they truly prepare for the next crisis?

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Australia is the world's sixth largest country by land area and the 13th largest economy by GDP. With a trade surplus of AUD 5.1bn (USD 3.2bn) and a population nearing 27m, Australia presents a unique market combining urban vibrancy, with natural resources and beauty. While the nation is experiencing significant growth and development, it also faces various risks and challenges.

This article developed by Economist Impact, sponsored by FM, delves into the hidden risks that Australian businesses face—those sneaky, out-of-sight threats that can catch even the savviest executives off guard. From geopolitical shifts that ripple across the Asia-Pacific region to the unpredictable climate featuring droughts, cyclones, floods, bushfires and hail; for Australian businesses there's revenue, profit, brand reputation and careers on the line.

So, whether you've braved the long journey down or are considering a relocation, get ready to uncover the unseen. This article is your guide to how business leaders perceive and navigate the not-so-obvious risks of doing business in Australia, ensuring you're prepared for whatever this extraordinary land throws your way.

Andrew Stafford
Senior vice president, operations manager, FM Australia & New Zealand

The materialisation of "out-of-sight" risks—those that fall under the corporate radar—cause considerable pain to Australian businesses. The country has faced significant disruptions, including the 2022 floods in Queensland and New South Wales, shipping disruptions in the Panama Canal, and cyber breaches targeting critical infrastructure. More than half (55%) of executives we surveyed in September-October 2024 say that most of the risk occurrences that have impacted their organisations in the past have been unexpected. And those developments have hit their bottom line: for 70%, revenue or profitability have suffered as a result; for 68%, such events have caused serious disruption to their supply chains (Figure 1).

The causes of such disruptive events are diverse and multifaceted. For example, supply-chain disruptions can result not just from geopolitical conflicts but also from cyber breaches or climate events. In 2023 a cyber breach at DP World Australia, a supply-chain logistics provider responsible for managing about 40% of Australia's goods trade, forced a three-day suspension of operations. Looking ahead, rising sea levels are expected to threaten 120 ports in the country by 2050, further increasing supply-chain risks.

"Australian businesses are failing to learn from the impacts of disruption," says Marita Corbett, national lead partner, risk advisory, at BDO Australia. "The pandemic exposed our supply-chain fragility, for example, but we've continued to struggle with global shipping disruptions since then."

Our research highlights weaknesses in risk management at Australian organisations that are heightening their exposure to unanticipated developments. Inadequate use of data is a major challenge to be overcome, as are broader weaknesses in risk maturity, including lack of safety nets and siloed risk management.

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Unexpected risks are hitting APAC businesses hard—nearly half of surveyed leaders admit they were unprepared for major disruptions. This report uncovers the most overlooked threats and offers practical strategies to strengthen risk management and build resilience. Discover what you can do differently.

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Data-driven insurance has become an increasingly important piece of the puzzle in helping Australian businesses protect against multiple risks. This includes the pressing issue facing the country—the intensifying climate crisis.

Explore innovative risk management solutions and discover how FM helps businesses enhance resilience. Visit our website for expert resources and insights.

In the Asia-Pacific, FM is a licensed direct insurer in Australia, Hong Kong Special Administrative Region, New Zealand, Singapore and South Korea. For other locations in the region, such as China, India, Indonesia, Japan, Philippines, Malaysia, Thailand, Vietnam etc please contact us and we will be happy to explore your insurance needs through and in close collaboration with locally licensed insurers, our WorldReach Partners.

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