Power Blackout Risks

financial markets: the lights went out after 4 p.m., which meant that the major U.S. stock exchanges had 
already closed – limiting the impact on financial markets. All the major exchanges and markets were up and 
running on Friday, but many trading companies were still without power as the trading day began.

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5.1. Trends affecting the BI risk landscape and power dependency 
5.1.1. general impact of blackout in ligHt of cHanged production processes 
Manufacturers embraced “just in time” production in the 1990s, imitating Japan’s auto makers. They cut stock- 
piles of parts and won discounts by buying more parts from a smaller group of suppliers. But that left them 
without a cushion of raw materials to ride out even small disruptions. 
As an indicator of the above vulnerability, the Earthquake, Tsunami damage and power shortages that idled 
thousands of Japan’s factories in 2011 highlighted its role as a key — and sometimes the only — source of auto 
parts, graphics chips and other high-end components. In fact, today, many manufacturers are currently using
up the inventories that they had in stock before the earthquake. A similar situation could occur as a result of a 
larger power outage.
5. Considerations for risk management 
figure 6: Japan’s shares in silicon industry (% of global suppliers)
Source: IHS Global Insight
Silicon Wafers
60%
23%
TFT LCD Panels
Semi-conductors
Japan
World
12%
consequences of the 2011 Japan tohoku earthquake for mobile phone & computers 
manufacturers 
•
apple: some parts of iPad (e.g. the flash memory, the super-thin battery, the built-in compass, the glass 
overlaying and the touchscreen) are produced exclusively by Apple Japan. That is why Apple had difficulties 
obtaining these components (logistical disruptions), even months following the event.
•
toshiba: has shut 1 of its 2 LCD (liquid crystal display) plants to recalibrate sensitive equipment knocked out 
by the earthquake. Hitachi too has shut its LCD Tokyo factory because of damages and power cuts. Indeed, 
LCD used in mobile phones and satellite navigation may be in short supply.
•
sony: has shut down 5 of its 6 laptop batteries factories in Japan. Other computer-makers may be hit by 
shortages of these batteries.