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Reputability LLP are pioneers and leaders in the field of reputational risk. We help business leaders to find the widespread but hidden behavioural risks and organisational risks that regularly cause reputational disasters. Here are our thoughts, and the thoughts of our guest bloggers, on some recent stories which have captured our attention. We are always interested to know what you think too.

Friday, 1 April 2011

Reputation and Nuclear Power

The reputation of the nuclear power industry and its regulators has been shaken by the Fukushima nuclear power station crisis in Japan, which brings back memories and concerns that followed the Three Mile Island (1979) and Chernobyl (1986) disasters.  Here are a few thoughts on how the nuclear industry can bring its reputation to that which it deserves.

First, the public needs reliable facts.  The nuclear power industry is notoriously secretive.  The resulting lack of transparency is not likely to encourage good safety practice. To start recovering its reputation, the industry needs to be inspected thoroughly and independently with the conclusions published.  And independently means independently of regulators.  History has too many tales of ineffective and incompetent  regulators, not to mention regulatory capture, for regulators to be universally trusted.

Here are some key questions.
  • What is the physical condition of each nuclear facility
  • How well is it run? 
  • How robust is the system, particularly if something starts to go wrong?
  • How could it go wrong?
  • How well is it prepared for mishaps or worse? 
  • How effective is its regulator?
BP was a highly respected company, but the authoritiative and independent  enquiries into the Texas City and Deepwater Horizon disasters showed unacceptable levels of equipment maintenance and management even if some of it had been inherited.  And Deepwater illustrated regulatory ineffectiveness, capture and worse.  If the nuclear industry is as good as it claims to be, it has nothing to fear from transparency.

Second, there needs to be a thorough, dispassionate assessment of the economic up- and down- sides of nuclear energy at the economic level, including a life-cycle analysis and risk.  Nuclear power reduces dependence on oil and coal, but a nuclear accident can bring huge cost and disruption to an economy.
  • How comparable, economically, is a serious nuclear accident to a major oil shock?  
  • How frequently can we expect one to happen?
  • With what economic consequences? 
  • How should we value the long term benefits and disbenefits?
Nuclear accidents are thankfully of low frequency - three in the last 32 years.  But the nuclear industry may well have been foooled by randomness into thinking that it is safe and well run. If the population of reactors doubles, it is quite possible that a major nuclear energy disaster every 5 years will come to be expected - just as there is a major banking crisis somewhere in the world every ten years

This is a serious task for independent multidisciplinary teams since the assumptions made must be realistic.  Poor modelling on inappropriate assumptions is one of the reasons that so few foresaw the latest banking crisis.  (Regulatory failure and capture were others.)

Third, governments must move beyond prevaricating about the long term storage of nuclear waste to constructing and using long term storage.  Temporary storage of nuclear waste dumps the problem on future generations.  This weighs heavily on how the public views nuclear power because the public is at times surprisingly - perhaps reassuringly - concerned about bequesthing dangerous problems for its grandchildren and beyond.

Fourth, since nuclear radiation does not stay within borders, nuclear regulation must become international.  There needs to be a network of nuclear industry policemen and regulators. They should linked internationally and, ideally, be independent of government and the military.  They need teeth, including the power to shut nuclear power stations if they are not being operated to the required safety standards.

Without information on the first two areas, there can there be no well-informed public debate on the risks and benefits of nuclear power to current and future generations.  Without resolution of all four, the nuclear industry and its regulators are unlikely to be trusted.  And without trust, the industry will face continual opposition from the public.

Whilst politicians can be won over by the industry's lobbying, politicians regularly face re-election. Nearly ten years ago, the perceptive Anthony Hilton observed that technology now allows public to mobilise against the Establishment.  That keeps pressure on politicians between elections.


Anthony Fitzsimmons
www.reputability.co.uk

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