Risk Management at Fukushima Daiichi by Tokyo Electric Power Company - Case Study Example

Risk Management at Fukushima Daiichi by Tokyo Electric Power Company (TEPCO) Student’s Name Course Tutor’s Name Date Executive Summary This report provides a risk management assessment of the nuclear accident that occurred in 2011. Specifically, the report assesses Tokyo Electric Power Company’s (TEPCO) risk management prior to the accident and also looks at how the company handled itself at the aftermath of the accident. The report starts with an introductory section that indicates that out of TEPCO’s six nuclear reactors based in Fukushima Daiichi, four were affected by a major tsunami that occurred in Japan in 2011. As a result, the reactors failed to cool, compromising the safety and livelihoods of thousands of people in the region. Although no related deaths were reported, contamination from radioactive components is a worry that those evacuated from Fukushima after the accident continue to live with. The case study section provides a detailed account of what happened during the nuclear accident at Fukushima. It also illustrates lapses in risk management by TEPCO, which created loopholes that eventually led to the disaster. Specifically, the case study indicates that TEPCO ignored warnings about a possible nuclear disaster, chose to embrace safety myths that led it to ignore the necessity of embracing a safety culture, and ignored Japan’s seismology information during the construction of the nuclear power plants. TEPCO also allegedly falsified repairs to its nuclear power plants, hence creating room for increased risks. The conclusion section of the report contains vital lessons drawn from the case study. These include the importance of embracing proactive risk management by organisations and the importance of having risk management at the centre of every management or business decision. The report also highlights need to consider the authenticity of objective external analysts especially on a risk issue that an organisation may be biased about, and the importance of having an internal risk management strategy. Introduction Many accidents that happen in the workplace arguably occur because the subject organisation had failed to engage in proper risk management practices. This report will adopt Malik and Holt’s (2013, p. 254) definition of risk management, which describes it as a “Systematic process that helps organisations to understand what the risks are, who is at risk, what current controls are for those risks and the judgements that need to be made about whether or not such controls are adequate”. When the nuclear disaster happened in Japan’s Fukushima Daiichi nuclear reactors, for example, there was uproar among critiques that indeed better risk management practices by the Tokyo Electric Power Company (TEPCO) would have foreseen the possibility of such an accident and hence embraced disaster preventative strategies. The Nuclear and Industrial Safety Agency (NISA), which is Japan’s nuclear energy regulator, also took some backlash from both the public and informed critics for failing to follow laid down international standards on nuclear energy standards and best practices (Acton & Hibbs 2012, p.1). Jointly, NISA and TEPCO have been blamed for ignoring three vital signs when formulating their disaster plans and risk management strategies. First, Acton and Hibbs (2012, p. 1) argue that the two organisations did not pay much attention that Japan is hit by a major tsunami once in an estimated every 800 to 1,000 years. Secondly, NISA and TEPCO used a tsunami modelling computer technique that was inadequate. Acton and Hibbs (2012, p.1) report that in the past, both organisations’ and governments’ attention had been drawn to the possibility that tsunami threats were not fully reflected by industry players. Unfortunately, such reports were allegedly not taken seriously by either party. Thirdly, it is argued that as the regulator, NISA should have reviewed all tsunami simulations modelled by TEPCO and decide whether they reflected the actual risk, and if not, ask the company to use better and more effective tsunami computer modelling tools (Acton & Hibbs 2012, p. 1). This report will not delve much into what NISA did or failed to do; rather, the report will concentrate on the management environment and cultural aspects in TEPCO that seems to have led to poor risk management, and hence the absence of disaster forecasting and management. The report will pay particular attention to TEPCO based on the argument that organisations have a moral responsibility to act ethically, and to manage all their risks in a manner that ensures they do no harm to the public and the environment (Malik & Holt 2013, p. 254). This report seeks to: Create a comprehensive understanding of TEPCO’s management environment and organisational culture prior to the Daiichi nuclear incident Draw vital risk management lessons from the nuclear accident Use the lessons drawn from the case study to provide the report readers with an understanding of major risks and how similar risks can be avoided. The Case Study On March 11, 2011, a tsunami that has been described as massive hit TEPCO’s Fukushima Daiichi nuclear plant. According to Suzuki (2014, p. 1245), the tsunami had been triggered by the largest earthquake that has ever hit Japan. In the wake of the tsunami, four nuclear reactors simply referred to as reactor units 1 to 3 failed to cool. This happened because the reactors lost power after the tsunami hit Japan, and the flood water disabled the back-up generators that had been installed to provide back-up cooling should power from the grind fail (World Nuclear Association (WNA) 2015, para.4). Cores to reactor units 1 to 3 melted within three days of the accident (WNA 2015, para. 4). It was reported that there was high radioactive releases following the melting of the reactors, something that led to the evacuation of more than 100,000 people (WNA 2015). Although no related deaths were reported, radiation worries are reportedly persistent among those who were evacuated, and may continue being so, for years to come. Livelihood were also lost, and collectively, it is argued that the accident had a major effect on Japan’s economy (Wharton School, n.d. para. 5). Notably, reactor 4 became problematic on the fifth day after the accident, while two more reactors (reactors units 5 and 6) were not inundated by the flood waters (Suzuki 2014, p.1248). Something worth noting is that the latter reactors were on a three metres higher elevation (i.e. 13 metres high compared to reactors 1 to 4, which had been constructed on an elevation of 10 metres high (Suzuki 2014, p.1250). The Fukushima Daiichi power plant had been constructed in the early 1960s. However, TEPCO has been criticised for failing to make use of the progress made in Japan’s seismology, and especially the potential risks that can result from earthquakes and the resulting tsunamis (Perrow 2011, p. 45; Suzuki 2014, p.1249). TEPCO had also built the Fukushima plant at a relatively low location, hence ignoring the fact that Japan was prone to seismic natural disasters, which would be triggered by earthquake. Citing Japan’s Prime Minister at the time Kan, Kingston (2012a, para. 20) notes that the low location where Fukushima Daiichi nuclear power plants (NPPs) were based could be interpreted to mean that Japan had never or would never experience major tsunamis. Unfortunately, the country’s history indicated quite the opposite of the forgoing suggestion. In an own report released after the accident, TEPCO (2012, p. 6) acknowledges that it was lax in embracing efforts that would have reduced nuclear-related risks. Matter-of-factly, the organisation acknowledges that its risk management efforts were not ample, especially in the adoption of safety enhancement measures and obtaining, analysing and utilising nuclear-related data (TEPCO 2012, p. 6). The organisation also acknowledges that it suffered from insufficiency of expertise or competence. Specifically, TEPCO acknowledges that it did not perceive the accident as it should have; did not release information about the accident in good time (Pratt & Yanada 2014, p. 2); and did not coordinate with other organisations, which should have helped manage the accident better as it should have (TEPCO 2012, p. 7). Wald (2014, para. 2) also notes that the biggest risk to nuclear plants is external rather than internal, something that TEPCO seemingly failed to appreciate. Based on the foregoing, it is quite evident that TEPCO’s risk response was poor since it had failed to avoid the risk, and even when the accident happened, the organisation did not accept, reduce or even share information about the risk with the right people and at the appropriate time. Away from TEPCO’s self-evaluation, Kingston (2012a, para. 3) raises several risk management anomalies that the TEPCO engaged in. First, he argues that TEPCO believed in the myth that nuclear reactors were 100% safe to run. Consequently, the company did not prepare adequately to deal with an incident or accident from the (NPPs). By extension, Kingston (2012a, para. 3) notes that because TEPCO believed that there were little or no risks associated with running an NPP, it lacked a safety culture, and consequently, did not have a crisis response strategy. TEPCO had evidently embraced the safety myth perpetuated by nuclear energy proponents who had the intention of overcoming anti-nuclear sentiments (Funabashi &Kitazawa 2012, p.11) As a result, TEPCO ignored the warning offered by the likes of Takagi Jinzaburo. According to Kingston (2012a, para. 10), Takagi – a nuclear chemist – had in 1995 had underscored the possibility of reactors’ meltdown should human error or natural conditions create the conditions necessary for such a meltdown to occur. Unfortunately, his warning was not taken seriously by the utility companies like TEPCO, the government, nuclear regulators and the nuclear academicians in Japan. The result was that six years later, Takagi’s exact prediction became a reality that nobody was prepared to handle. Kingston (2012b, p.188) also indicates that a whistleblower had revealed that TEPCO had a long-standing habit of falsifying repairs in its NPP since 2002, something that further indicates that its management culture and operating environment did not pay much attention to effective risk management. Conclusion While the Fukushima Daiichi nuclear accident has been blamed on several factors, TEPCO is culpable and for good reasons. This is because it was responsible for upholding safe operations on all its NPPs, something that it could have done through an effective risk management strategy. Lessons that can be drawn from the above case study include the need to be more proactive in the development of a risk management strategy as opposed to blindly trusting what the industry believes to be true. For the case of TEPCO, believing that NPP management was 100% safe dissuaded the company from taking a proactive role in risk management. The safety myth arguably affected TEPCO management’s risk perception, something that undoubtedly had an effect on the risk culture or the lack thereof in the company. To a great extent, the TEPCO management failed to lead from the front by embracing a pro-active risk management strategy and instead opted to trust and rely on a safety myth that prevailed at the time. Another vital lesson that can be drawn from the TEPCO case study involves the need to believe external analysts who may have a more objective perspective of an industry compared to players in the industry. Arguably, TEPCO and other proponents of nuclear energy may have been biased in their appraisal of possible disasters to the NPPs. However, their bias is not a good enough reason for ignoring an arguably objective warning given by a nuclear scientist. If anything, TEPCO and other industry players should have taken the warning seriously and managed any related risk effectively. The third lesson drawn from the TEPCO case study relates to the importance of having an internal environment risk management strategy. As is evident from the case study, TEPCO did not know how or when to respond (even through information sharing). The foregoing shortcoming indicates that the company neither had any objectives for managing risk nor did it have any risk identification, assessment or response strategies. Consequently, the organisation’s information and communication was poor during the accident. Notably, all risk components are handled by the management and are critical to any management process (Malik & Holt 2013, p. 256). TEPCO’s case of failing to handle risk components well is therefore indicative of a lax management function and environment. Finally, one can learn that although it is hard to predict what nature will bring, human beings can take precautions that prevent risks from becoming disasters. Arguably, risk management needs to be a central thought from the very beginning of an organisation. TEPCO’s construction in a low region, for example, could have been avoided had the management then come to terms with Japan’s proneness to tsunamis. In other words, risk management needs to be central to any business and management decisions that the management makes. References Acton, JM & Hibbs, M 2012, Why Fukushima was preventable, Carnegie Endowment, Washington DC. Funabashi, Y & Kitazawa, K 2013, ‘Fukushima in review: a complex disaster, a disastrous response’, Bulleting of the Atomic Scientist, vol. 68, no. 2, pp. 9-21 viewed 12 August 2015, . Kingston, J 2012a, ‘Mismanaging risk and the Fukushima nuclear crisis’, The Asia-Pacific Journal: Japan Focus, viewed 12 August 2015, . Kingston, J 2012b, ‘The politics of disaster, nuclear crisis and recovery’, in J Kingston (ed.), Natural disaster and nuclear crisis in Japan: response and recovery after Japan’s 3/11 (pp. 188-206), Routledge, New York. Malik, SA & Holt, B 2013, ‘Factors that affect the adoption of enterprise risk management (ERM)’, Insight, vol. 26, no. 4, pp. 253-269. Perrow, C 2011, ‘Fukushima and the inevitability of accidents’, Bulleting of Atomic Scientists, vol. 67, no. 6, pp. 44-52. Pratt, CB & Yanada, A 2014, ‘Risk communication and Japan’s Fukushima Daiichi nuclear power plant meltdown: ethical implications for government-citizens divides’, Public Relations, vol. 8, pp. 1-27. Suzuki, A 2014, ‘Managing the Fukushima challenge’, Risk Analysis, vol. 34, no. 7, pp. 1240-1256. TEPCO 2013, Fukushima nuclear accident summary & nuclear safety reform, viewed 12 August 2015, Wald, M.L 2014, ‘Nuclear plants should focus on risks posed by external events, study says’, The New York Times, viewed 12 August 2015, . Wharton School 2013, Lessons in leadership from the Fukushima nuclear disaster, viewed 12 August 2015, . World Nuclear Association (WNA) 2015, Fukushima accident, viewed 12 August 2015, Read More