Japan is now facing its most severe destruction since World War II. An earthquake of magnitude 8.9 struck on March 11 at 2:46pm local time, followed by a devastating tsunsami that was 10 meters high and rolled 10 kms inland, and then back out to sea. In some cases, whole towns are feared for. In Minamisanriku the 10 meter tsunami wiped out much of the town and swept many to sea. The full impact of these two events are still being determined, as emergency crews are only now reaching affected areas, but there is fear for many tens of thousands of people. The damage to infrastructure is huge, and will be expensive, but in many cases was much less than might have been expected in other parts of the world – the Japanese had been preparing for a big earthquake for a long time.
The more significant risks seem to be emerging around Nuclear power plants in the affected areas. While the plants withstood the original earthquake, and tsunami scenarios had been considered in their construction, the weak link proved to be the reactor cooling systems. When the power failed, the backup generators kicked in, but they were overwhelmed by the tsunami and failed. The failure of the cooling systems is critical, and may lead to partial meltdowns of the reactor core, or worse. At the moment everyone is focused on preventing that, taking such extreme measures as flooding the reactor cores with seawater which everyone is hoping will prove enough.
Japan generates a large percentage of its power from nuclear plants. Already there are rolling brownouts as capacity is offline. Japan will find itself power-challenged for a while, with at least a medium term disabling of several power plants.
While there are many perspectives and lessons which will be studied for a long time, one of the more important is how risks can occur in clusters. The Earthquake/Tsunami link is easily seen, and this level of risk planning was present in the considerations of the nuclear power plants. However, there remained a weak link in the cooling systems. This weak link will have a large number of longer term consequences that go well beyond the current emergency:
- Japan will be power-challenged for some time as critical power capacity is offline. Recovery plans for some of the reactors are completely unknowable at this time.
- There will be an economic hit from reduced economic activity as the power situation acts as a brake on some of the economy.
- The concerns over nuclear safety issues may hamper efforts related to nuclear activities in other parts of the world.
In the same way that the deepwater drilling accident in the Gulf of Mexico sideswiped drillers in many other countries, the events here will likely sideswipe nuclear plans in many other jurisdictions.
While most companies rarely prepare for such dramatic events, the cluster analysis is a key step in risk planning for many organizations.
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