Business Risk Management: Analysis of Fukushima Nuclear Disaster

This report analyses the risk that occurred in the Nuclear Disaster in Fukushima in the year 2011 and its impact on the economy, environment and health and safety of the humans. It also provides recommendations to minimize the risk within the organization.

Running head: BUSINESS RISK MANAGEMENT
Business Risk Management
Name of the Student
Name of the University
Author Note

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Executive Summary
The main aim of this assignment was to analyse the risk that had occurred in the Nuclear
Disaster in Fukushima in the year 2011. The report also focussed on the impact of the disaster
on the overall economy of Japan and the consequence of the risk on the economy,
environment and on health and safety of the humans. The main aim of the report was to
analyse the case study that was related to Fukushima Nuclear Disaster that took place in
Japan in the year 2011. Accordingly, by assessing the risk in the power plant with the help of
different stages of the crisis management, the Fukushima power plant implemented the
various policies and standards of the IAEA, so that it could prevent the risk in the near
future.. Apart from this, the report also focussed on the standards of the IAEA and compared
it with the nuclear power plant of Fukushima. In order to mitigate the risk in the future
aspect, the Tokyo Electric Power Plant that operates the Nuclear Power Plant in Fukushima
incorporated certain measures in order to minimise those risk. Apart from that
recommendation also provided so that the nuclear power plant could operate and monitor
their work by implementing safety standards.

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Table of Contents
Introduction....................................................................................................................3
Case Study......................................................................................................................3
Risks Related to the Fukushima Nuclear Disaster.........................................................4
Standard Regulations that should be used by Nuclear Power Plant...............................7
Compare and Contrast....................................................................................................7
Recommendation............................................................................................................8
Conclusion......................................................................................................................9
References....................................................................................................................10

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Introduction
The importance of the Business Risk Management is to identify and analyse the risk
that has occurred or likely to take place within the business organization in order to minimize
it. Risks in business can lurk out at any point of time, sometimes the risks are predictable and
can be controlled, but most of the cases risks are unpredictable and are not possible to control
(Hillson and Webster 2017). In case of the Fukushima Daiichi Nuclear Disaster, the accident
took place during the year 2011 in Northern Japan, is considered as one of the biggest nuclear
disaster in the world, after the Chernobyl disaster. The Nuclear power plant of the Fukushima
was mainly operated by the Tokyo Electric Power Point, (TEPCO), and the disaster was
mainly caused because of their negligence. However, it was said that the nuclear power plant
was mainly made up of six boiling water reactor, but at the time of the disaster, only 1-3
reactors were in operation. The nuclear disaster had severely affected the power plant, and it
cause major damaged to the environment and also to the lives of many people. The disaster
was mainly considered as man-made disaster, as it provided major risk to the country. Apart
from that, as the workers of the power plant continued to cool the reactors, it was said that
there was increase in the radiation level in foods (Sadgrove 2016). It has also been noted that
many species were affected from the increase level of radiation and human beings were also
suffered from cancer and other severe diseases. The Fukushima disaster caused severe risk to
the whole economy, and it resulted to economic risk, environmental risk and healthy and
safety risk. However, in order to deal with the risk, the power plant implemented different
risk management strategies such as it has applied varied standards and policies.
In this assignment, the report elucidates on the Fukushima Daiichi Nuclear Disaster
and would identify the major risk related to this case study. Furthermore, the paper would
also sheds light on the major polices and rules that would help the organization to maximize
their risk and accordingly recommendations would be provided in order to minimize the risk
within the organization.
Case Study
The Fukushima Daiichi Nuclear Disaster in Japan is considered as one of the
biggest disaster after the Chernobyl disaster in the year 1986. The nuclear disaster that took
place in the year 2011, cause a major damage to the power plant by leaking large amount of

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radioactive elements. Furthermore, the damage also had a severe impact on the environment
and on the lives of people in Tokyo (Tanisho 2016). The nuclear power plant is located
between Futaba and Okuma in Japan and consists of six major boiling water reactors (BWR).
The boiling reactors helps in the generation of electricity with the combination of 4.7 GW
power and thus it makes Fukushima as one of the fifteenth biggest nuclear power station in
the world. In the year 2011, in March 11, the nuclear disaster at Fukushima was occurred
because of the 9.0 earthquake, and that was followed by the unexpected tsunami that hit the
power plant by causing severe damage to the nuclear power plant. Apart from that, the
disaster triggered in to the evacuation zone of 30km that lead to the leak of nuclear radiation.
However, after the disaster, certain units such as unit 1-4 are not operating any more (Bonetti
and Michelon 2015). Apart from that, the disaster was considered as a man- made disaster, as
the melt function of the nuclear reactor lead to major risk to the organization and overall to
the economic situation of the country. It has been stated that the power plant should not have
automatically shut down, as this had lead to major crisis. The Japan Parliamentary accused
and blamed Tokyo Electric Power for not taking any adequate measures in order to control
the risk in the power plant, despite of knowing the facts that the area was prone to earthquake
and tsunami (Labib and Harris 2015). Since the year, 2006 the Tepco and the regulators were
aware of the major risk that if tsunami occurs that plant would likely to suffer huge loss, but
they did not paid any attention to it.
Risks Related to the Fukushima Nuclear Disaster
In case of the major nuclear disaster in the Fukushima nuclear plant, the disaster has
lead to the major risk related to the risks related to economy, environmental risk and safety
risks. As it has been stated by the Government of Japan that the disaster was a man-made
disaster and with better precautions the risk could have been mitigated, but Tepco neglected
the situation and it had severe effects on the whole economy of Japan, and still now the
effects are there (Merz, Shozugawa and Steinhauser 2015). The major risks that were resulted
from the disaster are discussed below:
Economic Risk
As a result of the disaster in Fukushima power plant, the business as well the overall
country suffered economic losses that lead to major economic risk in the country. The Japan
Ministry of Economy, Trade and Industry had to compensated the victims and to the families

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of the workers who were killed in the disaster, a compensation around ¥ 21.5 trillion, (US $
187 bn; € 175 bn) (Steinhauser, Brandl and Johnson 2014). This had lead to major loss to the
business, as large amount of money required for many purposes that includes for removing
the reactor from the contaminated soil and more. However, the major economic risk had a
negative impact on the organization that is discussed below:
Indirect costs- fuel imports
It has been stated that the Fukushima nuclear disaster has resulted in to the myriad of
the indirect costs, though the indirect cost could not be measured, but it could be said it was
required in replacing power from the idled reactors of Japan’s fleet. The replacement power
which was required to implement would result in the increase of the renewable and also will
increase the use of fossil fuels. It has been mentioned that in order to import fossil fuels for
the power plant as a replacement power, cost the business ¥ 3.6 trillion that means US$ 31.3
bn, that was considered a larger amount, and the costs are increasing every year in order to
replace power (Bonetti and Michelon 2015). This had impact a major loss to the organization
as it had to invest majority of the finance in replacing and importing alternating power for the
power plant. Apart from that, the cost for the importation of fuels resulted to US$ 266 billion
as per the 2012 report (Dreiling, Lougee and Nakamura 2017). ASME also noted financial
risk in case of decommissioning and also for cleaning up the power plant and it also had to
compensate the victims. As per the report of ASME, it has been stated that the consequences
of disaster had a severe effect on the economic condition of the country as it inflicted
enormous cost to the overall society.
Macroeconomic Impacts
In the 2014 Strategic Energy Plan, it has been noted by METI that after the nuclear
disaster the electricity prise have been risen to greater amount and as per the report six of the
major electric power organization have increased the power ranges from 6.2% to 9.8%. This
had resulted in the increase in electricity price for the households by 20%, because of the
increase in the price of fuels (Hasegawa et al. 2015). This had a severe consequence mainly
on the below average families, as they had to cut their electric power and this directly had a
negative impact on the business of the power plant. The 2014 report further stated that rise in
the electricity prices have put severe pressure on the profit of the small and medium sized
industries and mainly on the energy intensive industries that lead to the decrease in the

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production transfer and also reduced profit from exporting electric power to overseas (Aliyu,
Mousseau and Ramli 2015).
Environmental Risk
The man-made nuclear disaster in Fukushima had led to severe environmental risk
that poses significant chronic risks and acute risk in the environment. From the leakage if the
radioactive elements in the environment, had contaminated the air, as it was proved that air
was contaminated with radioactive elements and half of the lives were contaminated.
Moreover, the people in that particular area were severely affected by high amount of the
radioactive doses that increased up to 5mSv (Aoyama et al. 2016). As radioactivity had been
detected in every part of the environment, it has misbalanced the environment system and
moreover not only the humans were affected, the whole ecology got disrupted. For instance
after the nuclear disaster, a rabbit was born without any ears that had increased fear within
the whole country. Moreover, not only animals, even humans had also born with deformities.
The whole world had exposed the effect of radioactive elements and still in the present day
most of the Japan’s coast, cities are getting contaminated with the radioactive elements (Park
2014). As per the report it has been stated that the release of the radio nuclides have damaged
the biota in the Pacific Ocean has increased attention and concern in the whole world. For
instance, the bluefin tuna of the Pacific that were migrated from Japan were contaminated
with large amount of radioactive elements and that also endangered the lives of other species
in the ocean (Batlle et al. 2018). Prior to that, the disaster also had a negative impact on the
climate, as increase in global warming had also resulted from the leakage of the radio
nuclides in the environment.
Health and Safety Risk
As per the study by the Stanford University in the year 2012, it has been stated that in
the nuclear disaster in Fukushima more than 1300 people died in the accident. The workers
who were working in the power plant had become victims of the disaster and this mainly
because of neglecting risks in the power plant (Aliyu et al. 2014). It has also been estimated
that majority of the people died of cancer because of the high dose of radio nuclides. Though
precaution have been taken by the Government after the disaster, but it could have saved
majority of the lives, if Tepco, would have taken some serious steps long before. Moreover,
the disaster also had psychological and mental illness on the people of Japan. On exposure of

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the ionizing radiation, many types of damages occurred to human health that is also known as
the acute radiation injury.
Standard Regulations that should be used by Nuclear Power Plant
In case of adopting safety measures in the nuclear power plant to avoid disaster like
the Fukushima Nuclear Disaster, all nuclear power plant should have certain standards. Prior
to that in the context of nuclear power plant, safety is linked with security and safeguards
(Kubota et al. 2015). As per the International Basic Safety Standards (IAEA), under
Article III, the Government of Japan should incorporate safety standards that would minimise
the risk in the power plant. However, the standards of the IAEA are only effective, if they are
put into practice by the Government (Ishikawa 2017). The standards of the IAEA comprises
of the safe transportation of the radioactive materials, safety operation of the nuclear power
system, proper management of radioactive waste and more. It has also been stated that
regulating safety measures is the responsibility of every country in regards to nuclear power
plant (Jopen et al. 2017). Some of the safety standards that have been adopted by the IAEA
include
 Radiation protection and Safety of the Radiation Sources.
 The Regulations for the safe Transport of Radioactive Materials.
 The Radioactive Waste Safety Standards. (RADWASS)
 The Nuclear Safety Standards. (NUSS)
All the above mentioned standards have been approved by the Governing body of the
International Labour Organization (ILO), in order to establish those standards to measure the
risks in the nuclear power plant. Apart from this, the safety standard series also consist of
factors that include safety guides, safety requirements and safety fundamentals. All the
series and documents have been ensured by IAEA, so that the nuclear power plant should
apply these documents for nuclear safety and for carrying out their work peacefully.

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Compare and Contrast
In comparing the safety standards of IAEA with the nuclear disaster of Fukushima, it
have been stated that the Tokyo Electric Power Company (TEPCO), did not follow any of
those measures in order to mitigate risk within the power plant. As per the International Basic
Safety Standards (IAEA), the Governing body has introduced certain standards and rules that
should be followed by every nuclear power plant (Orita et al. 2015). As per the first standard
of the IAEA, Radiation protection and Safety of the Radiation Sources, states that every
nuclear power plant should take effective measures to reduce radiation and prior to that
training should be provided to workers related to reduce radioactive elements in the
atmosphere. But it seems that in order to mitigate risk, the Tokyo Electric Power Company
that regulates the power plant of Fukushima did not take any such measure to reduce the
amount of radioactive elements that are being exposed to the environment (Yamashita et al.
2016). Another safety standard of the IAEA states the Regulations for the safe Transport of
Radioactive Materials, that means in case of transferring the radioactive materials to other
parts of the country, they plant should measures safety so that any living organisms should
not be hampered due to this. However in the case of Fukushima, they did not implement any
of this strategy and that results tuna fish in the Pacific Ocean were exposed to radio nuclides.
As per the Radioactive Waste Safety Standards, nuclear plant should not dump their waste
anywhere as the waste is toxic waste, therefore the waste should be recycled in order to
reduce risk in the environment. Radioactive waste management means, diluting the waste in
such a way, so that after returning the radio nuclides to the atmosphere should remain
harmless (Tsuda et al. 2016). This safety measures were nit followed by the nuclear power
plant and large amount of radioactive elements were discharged in the environment, and thus
it result to environmental risk. In order to reduce the risk that occurred from the Fukushima
Nuclear Disaster, the Tokyo Electric Power Plant (TEPCO), implemented the six stages of
the crisis management were incorporated that include warning, risk assessment, response,
management, resolution and recovery. For instance, to recover from the risk, the organization
implemented risk assessment strategy to assess the risk and accordingly with implication of
various policies such as safety to workers, recycling of radioactive waste tried to recover
from the crisis.

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Recommendation
The Tokyo Electric Power Plant that regulates and operates the Nuclear Power plant
of Fukushima has implemented certain measures in order to ensure that the power plant do
not cause any harm to the environment and also to the public. After the disaster, the power
plants are designed in such a way, so that the plant could predict the risk and thus that could
be easily controllable (Doss 2016). For instance, all the electric power industries in Japan
have committed to adopt safety measures, and also installed emergency power supply units,
that would supply power at lower cost. Apart from the measures taken by the power plant and
electric companies, they could also implement various other strategies that include control of
the radio activity elements that means controlling of neutron flux, and by decreasing the
neuron flux, it becomes easy to reduce radioactive elements. The most common strategy to
reduce the neuron flux is by implementing the neutron- absorbing control rods. Other
measures to reduce risk in the power plant include maintenance of the core cooling system
that means nuclear plant should have cooling reactor (Yamashita et al. 2016). The Fukushima
power plant should implement the cooling reactor with the use of water, and if water is not
available it can cool with sodium or sodium salts. Cooling reactor also focus on the
monitoring of various instrument and also monitors prevention of the failure of any
equipment. Prior to this, most importantly safety is foremost important for the workers in the
nuclear power plant therefore, protective clothing must be provided to the workers. In case of
handling any equipment, it should be handled via monitor and prior to this, the time of the
workers should be limited in the area of high radiation levels.
Conclusion
From the above assignment and from the case study it could be concluded that the
nuclear disaster in the power plant of Fukushima that took place in the year 2011, was a
manmade disaster that had a severe consequences on the overall economy of the country, and
also had severe effect on the environment and health. It has been stated that The Tokyo
Electric Power Plant that operates and regulates the nuclear power plant did not paid any
attention in mitigating the risks that were likely to occurred to the power plant. It had also
been mentioned in the report; the nuclear disaster had posed major risk on the environment
and on the overall economy. The plant had suffered major financial loss in replacing power
reactor after the disaster and beside that they also had to compensate large amount to the

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victims and their families. In case of environmental risk, it had severe effect on the
environment as many species have been endangered and many species were born with
deformities after the nuclear disaster. As per the health and safety risk, the power plant did
not implement any measures and that lead to death of many workers and prior to that many
people of Japan had died of cancer. After the disaster, the electric companies as well as the
nuclear power plant implemented various measures that are related to the IAEA standards, so
that they could predict and control the risk.

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