With increasing frequency comments on the ongoing sovereign debt crisis in Greece and the euro zone include a reference to the need to avoid a repeat of the collapse of the investment bank Lehman Brothers in September 2008. The basis for this otherwise puzzling comparison is the concept of “contagion,” that is, cascading failures in the financial sector – the “falling dominos scenario” – which once started with a single “event” cannot be halted, by any means currently at our disposal, until other (perhaps many other) large losses occur.

Full post here: Catastrophic Failures in Risk Management 2 [PDF]

Intergovernmental Forum on Risk Management 2011 Conference Board of Canada, Ottawa, May 2011 and the 3rd iNTeg-Risk Conference: “Risk vs. Risk” Stuttgart, Germany, June 2011. PDF version of slides here: Blindsided by Risk

Dr. Atsuo Kishimoto is a member of the Research Institute of Science for Safety and Sustainability (RISS), National Institute of Advanced Industrial Science and Technology (AIST) , Onogawa 16-1, Tsukuba 305-8569, Japan. This presentation was delivered at the iNTeg-Risk Annual Conference, 7-8 June 2011, in Stuttgart, Germany and is made available here with the kind permission of Dr. Kishimoto:

Atsuo Kishimoto, “Risk governance deficits in the multiple risk situation: The Great East Japan Earthquake, Tsunami, and Fukushima nuclear accident” [PPT]. IR_JP 1 4_Kishimoto

The essential mission of risk management is to “anticipate and prevent or mitigate harms that may be avoidable.” The detailed, ed retrospective analysis of risk management failures is a crucial aspect of learning from mistakes and making the requisite changes to avoid or mitigate future failures. This type of analysis seeks to provide a precise accounting of the situation as it existed before the catastrophic failure occurred, included what was known, or reasonably should have been known, by the main actors in the events, about relevant information and alternative strategies for risk reduction. (Thus it is not a case of adding blame after the fact for mistakes that could not have been foreseen by anyone.)

A series of articles published in The New York Times since March 2011 is indispensable for understanding what when wrong, and why. For a full list of all articles, go to: The New York Times, “Times Topics”:

EARTHQUAKE, TSUNAMI AND NUCLEAR CRISIS

http://topics.nytimes.com/top/news/international/countriesandterritories/japan/index.html

The following Times articles are of particular interest:

1. “Japanese Rules for Nuclear Plants relied on Old Science,” by Norimitsu Onishi and James Glanz, 26 March 2011:

The offshore breakwaters protecting Japan’s nuclear plants – all of which face the sea – were designed to protect against the risk of typhoons, but not the risk of tsunamis. In general, this article’s review of Japan’s approach to nuclear safety concludes: “Japan is known for its technical expertise. For decades, though, Japanese officialdom and even parts of its engineering establishment clung to older scientific precepts for protecting nuclear plants,… failing to make use of advances in seismology and risk assessment since the 1970s.”

2. “Culture of Complicity tied to stricken Nuclear Plant,” by Norimitsu Onishi and Ken Belson, 26 April 2011:

This article details the long-term web of complicity among industry officials, politicians, and government regulators which ensured that dissenting views on risk management were systematically excluded from consideration. “Influential bureaucrats tend to side with the nuclear industry – and the promotion of it – because of a practice known as amakudari, or descent from heaven. Widely practiced in Japan’s main industries, amakudari allows senior bureaucrats, usually in their 50s, to land cushy jobs at the companies they once oversaw.”

3. “Japanese Officials ignored or concealed Dangers,” by Norimitsu Onishi and Martin Fackler, 16 May 2011:

During decades of successfully battling against lawsuits filed by civilians against the nuclear industry in Japan, industry officials and academics regarded as friendly to the industry systematically covered up deficiencies in the siting of the plants, seismological records, the existence of fault lines, and the viability of the safety measures at the plants.

4. “’Safety Myth’ left Japan ripe for Nuclear Crisis,” by Norimitsu Onishi, 24 June 2011:

The use of robots for emergency measures at nuclear plants – especially when radiation levels are very high – is standard in the industry around the world, but not in Japan, despite the fact that it is the world’s leader in robotic technologies. Why not? Hiroyuki Yoshikawa, a robotics expert, explained: “The [nuclear] plant operators said that robots, which would premise an accident, were not needed. Instead, introducing them would inspire fear [among the public], they said. That’s why they said that robots couldn’t be introduced.”

I am particularly concerned with emerging risks with the potential for catastrophic losses, which will be, in my view, an integral feature of an increasingly globally-interconnected world. Of course, this is an overriding concern for both the insurance and reinsurance industries as well as for governments (in their capacity as insurers of last resort for their citizens). In my presentation at the iNTeg-Risk conference I mentioned three such events in the past three years: the global financial crisis (ongoing since late 2008, with no end in sight and with almost incalculable levels of realized and projected losses around the globe); the BP spill in the Gulf of Mexico (2010); and the nuclear industry crisis in Japan (2011).

This is the opening paragraph from Dr Leiss’ opening remarks at the iNTeg-Risk/IRGC Joint Session on Emerging Risks in Stuttgart, 6 June 2011. A copy of his full talk is attached.

Emerging Risks

Member, for sale International Advisory Board, ed iNTeg-Risk (2011-2014), a Virtual Institute set up under the EU Seventh Framework Programme [EU-VRi], Stuttgart, Germany [http://www.integrisk.eu-vri.eu/]