Special Report on the Great East Japan Earthquake

The World Economic Forum’s Global Risks 2012 report features a special report on The Great East Japan Earthquake that killed nearly 20,000 people in March, 2011. The report provides some insights that experts learned from the disaster.

Unforeseen Consequences Ripple through Complex Global Systems

The interconnectedness of risks in the global system can be seen by the response that took place in Germany. The disaster in Japan triggered public protests and political pressure in Germany. As a result, Germany decommissioned its older nuclear plants and more will fall into the same fate by 2022. The pressure did not give any opportunity to investigate any safety issues in the plants that got decommissioned. The plants were shut down without any scientific investigations.

In addition, the destructive consequences of the tsunami resulted in effects that were unforeseen. The direct damages were around US$220 billion by June 2011 but indirect consequences include economic damages were projected that they could go up to US$776 billion. This is a result of the increased complexity of the global system; one crisis causes other crises in other areas of the global system.

Resiliency in Complex Systems May Come from Redundancy

Businesses have been adopting lean business practices. Unfortunately, the global supply chains have vulnerabilities that make a remote company to be heavily affected by a risk event in a far away country. For example, the disaster in Japan disrupted the supply chains of auto manufacturers in Detroit, Michigan, as an automotive microcontroller chip supplier was affected in Japan. Detroit companies did not have alternative suppliers. The global economy has seen increased centralization and fall of redundancies in the supply chain. While this has been beneficial, the global system is exposed to supplier-side vulnerabilities if those centralized suppliers experience productions disruptions.

The Value of Adaptive Leadership

The report features a company, Lawson, which resumed 80% its operations in four days of the Japanese disaster because of its adaptive leadership. The company learned from a previous disaster and established mechanisms to monitor and respond to emerging risks at each of its branches. The company had provided employees with tools and necessary authority to make quick decisions and respond quickly to disasters.

Advancing into the Information Space

The report argues that leaders such as business leaders and political leaders need to be timely in providing information to avoid reputation and trust loss. The use of silence is not an effective tool especially when dealing with huge crises. In the absence of factual information that provides what is known and what is not known other information will fill that vacuum with potentially false and damaging information. The report notes that Tokyo Electric Power Company’s (Tepco) had a poor public relations reputation in crisis events. Slow information sharing allowed suspicions among the Japanese citizens who used social media to communicate to each other and criticize and question the government’s integrity and response efforts.

The Skills of Leadership and Followership

The Japan earthquake and tsunami disaster showed how crucial good leadership and followership is needed. The report defined good followership as “the capacity to avoid two extreme forms of group behavior – excessive conformity and excessive conflict – that can impede the capacity for effective crisis response.” The report notes that Japan experienced both extremes during the crisis. Some agencies were so conforming that it impeded the effectiveness of Japan’s response communication and response.

Original Article Source: “Global Risks 2012
Seventh Edition“, World Economic Forum, 2012