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Businesses can learn from sifting through the rubble of the 6.8-magnitude Niigata-Chuetsu-Oki Earthquake that occurred in central Japan on July 16, according to an expert recently back from the Pacific.

A top lesson taken home by Peter Yanev, director with catastrophe-loss-control firm Global Risk Miyamoto and co-founder of modeler Eqecat Inc.: Loss from an earthquake can come as much from post-event mistakes as from the event itself.

He referred to Kashiwazaki nuclear plant, whose operator Tokyo Energy Power Co. waited three days to report a fire and radioactive leakage.

In those three days, international media broadcasted images of the fire and fed speculation about the damage. The result--the Japanese government shut down the site for the rest of the year to investigate. The catch--the plant had been correctly built to avoid critical damage and was properly shut down before the quake, Yanev said. TEPCO posted a formal apology on its homepage on Aug. 10, but it was too little, too late.

"Instead of engineering success, you have a massive communication failure and massive business interruption," said Yanev.

For another lesson, Yanev pointed to Riken Corp., whose manufacturing plant in the Niigata Prefecture site produces piston rings for nearly half of all Japanese automobiles. The ground shaking displaced the plant's heavy machinery. It took a week to get the factory running again, said Yanev, during which time automakers had to stop production on some lines.

The lesson--"Just-in-time manufacturing is OK if you don't have natural disasters," said Yanev, adding that emergency links in a supply chain are crucial.

Yanev's third insight is one that modelers, structural engineers like Yanev and other quake gurus can appreciate most. Typically, it's assumed and calculated into models that soft soil around a building is bad because it amplifies the shaking. Not true in the Niigata-Chuetsu-Oki Earthquake. The surrounding soil was soft, but traditional Japanese buildings in the area were heavy and stiff, said Yanev. The result was that the buildings behaved like a boat in choppy surf.

"You can shake the water all you want, nothing happens to the boat," he said.

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October 1, 2007

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