As Typhoon Vongfong tracks away from Japan, leaving destruction in its wake, StrategicRISK publishes an overview of the country’s unique and catastrophe-challenged risk landscape
StrategicRISK’s 2014 Japan Risk Report looks at the major perils faced by corporates operating in a country under threat from both natural catastrophes and its own demographics.
The StrategicRISK Japan Risk Management Roundtable held in Tokyo recently brought together risk and insurance professionals from some of Japan’s biggest multinational corporations to examine the country’s risk landscape.
There was plenty to discuss in addition to human capital and nat cat issues, with money laundering and fraud, cyber risk, economic uncertainty, threats to supply chains, product recall and reputation risk all high on the agenda.
However, the undoubted top threat to corporations and society was named as natural catastrophe risk. This is no surprise, given the impact of the 2011 Tohoku earthquake and subsequent tsunami and Fukushima Daiichi nuclear disaster.
Several recent events have further underscored this risk, including this week’s Typhoon Vongfong, which catastrophe modelling firm AIR Worldwide reports has now tracked away from northern Japan and dissipated over the north-western Pacific Ocean.
The storm made landfall on Monday at the south-western tip of Kyushu Island. It then accelerated and turned towards the northeast, passing across and impacting much of Japan.
At one point, Vongfong was a super typhoon with wind speeds above 257km/h, making it the strongest tropical cyclone to occur this year worldwide.
There were multiple landslides and road closures across Japan, more than 800,000 people were urged to leave their homes, and some 150,000 homes lost power.
Tokyo Electric Power Co, the operator of the crippled Fukushima nuclear power plant, was forced to increase water transfer and storage capacity to prevent an overflow of radioactive water being stored at the plant.
The 2011 Tohoku earthquake and subsequent tsunami and Fukushima Daiichi nuclear disaster has left Japan with an ongoing problem: what to do about its nuclear power infrastructure.
When a 5.6 magnitude earthquake struck 44km north-northeast of Tokyo last month, operators of the Fukushima Daiichi plant reported no additional damage to the facility.
However, soon afterwards, the eruption of Japan’s second highest volcano, Mount Ontake, further highlighted the risks facing its nuclear industry.
Japan’s Nuclear Regulation Authority had only recently approved the restart of a nuclear power station in the country’s south-west. This was seen as the first step to reopening an industry that had been dormant since 2011.
However, the Ontake eruption raised concerns that such a move could place the country in danger, as the plant is in a region with several active volcanic sites.
These recent events serve as a reminder that Japan’s nat cat threat is real and that the nuclear power issue should remain front of mind.
For more on Japan’s risk landscape, download StrategicRISK’s 2014 Japan Risk Report, which is sponsored by Zurich and supported by the Pan-Asia Risk & Insurance Management Association (PARIMA).
All StrategicRISK’s Asia-Pacific country reports are available here.