From the safe vantage behind a UK TV screen, the scale of the disaster unfolding in Japan in recent days is hard to comprehend. The sixth largest earthquake in recorded history, this and the equally devastating tsunami it unleashed have demolished entire coastal towns and left the country’s transport and power networks in chaos. According to media this week, a staggering 10,000 people are feared dead.
Amid the turmoil on the streets, inevitably there is turmoil in the country’s economy, the world’s third largest after the US and China. Experts cited in some newspaper reports warn that the economic losses could exceed £100bn, with estimated insured losses of around £22bn, potentially the ‘most expensive’ natural disaster bill in history, according to one Metro newspaper headline.
Car manufacturers and their suppliers, including many chemical firms, are feeling the effects acutely as many of the country’s carmakers are located in the hardest-hit north east of the country.
Business around the globe, meanwhile, also continues to suffer as a result of the continued political unrest in Libya, with recent reports that the price of Brent crude has soared to above $111/bbl and US crude oil prices similarly rising. Libya is the 12th largest oil exporter, the BBC reports, and most of its output goes to Europe.
Companies, including the chemicals sector, have had to weather plenty of global disasters over the past few years – admittedly including several ‘man-made’ events such as the Deepwater Horizon oil spill. But while many of these events were predictable and could or should have been foreseen and possibly prevented, others including the Japan quake are – although not entirely unpredictable – extremely difficult to pinpoint or avoid.
It is timely that last week’s blog and a recent C&I feature have been about making the case for ‘scenario planning’ – an eminently sensible strategy, whatever the scenario envisaged. But while business planning is all well and good, as the events of recent weeks have shown it is always best to prepare for the unexpected.
Cath O’Driscoll, Deputy editor