Category: Business Report


Nuclear energy has been termed as a better alternative of the fossil fuels and hydro forms of electricity in the globe owing to the dwindling resources used in the generation of other forms of power. The world nuclear association states that there are over 435 commercial nuclear power reactors that operate in 31 countries. These reactors possess an ability to generate over 375,000 MWe. There are about 70 more reactors under construction. Nuclear power provides over 11% of the world’s electricity without carbon emission, and it ensures reliability. The large number of nuclear reactors brings about the need to institute risk management approaches to curb some of the numerous nuclear related accidents exhibited over time.

What is a Risk?

According to Jorda?o and Sousa (2010) a risk is the probability that a threat, loss or injury will occur. The occurrence of a risk may lead to injury to an individual, loss to an organization or destruction to properties. There are different specific definitions accrued to risks in multiple disciplines. However, each of these disciplines tend to point in the same direction and superimpose on the same connotation that a risk is a probability of a loss, injury and materializing of a threat at a certain time period.

Types and Sources of Risks

Organizations are constantly faced with numerous sources of risks that may be categorized into four broad categories:

Safety Related Risks

Integrated risk management approach could be used to improve the analysis and management of safety related risks that include nuclear, radiological and environmental areas. Nuclear safety issues are widely adopted and understood by the International Atomic Energy Agency (IAEA) member states. The Nuclear Power Plants (NPP) industry adopts the PSA for the analysis of the nuclear ,safety, which is termed as the most sophisticated risk analysis methodology in the globe.

Production/Operation Risks

Production or operation risks are tied to the resources and those products found in the markets traded by an organization or firm. Included in this list are the labor force risks, inventory risks, technological risks, outage risks, marketing and production risks, product design as well as plant design risks. It is important to note that very little aspects of these risks have been picked up by the NPP safety risk assessment portfolio (Pagani, Smith & Apostolakis, 2004).

Financial/Commercial Risks

Risks can occur due to the movement of financial variables in an organization. Some of these variables include prices of resources and finished goods, currency exchange rates and the interest rates in the economy. These financial variables are expected to gain an important role in the NPP industry as it moves from a regulated rate controlled one to one of the competitive electricity selling industries in the globe (Pagani, Smith* & Apostolakis, 2004).

Strategic Risks

These risks result from fundamental changes in the commercial, economic and political environment. Examples include a change in the type of government, changes in the spending rates of the governments, nationalization, privatization, expropriation, marketplace competition, public perception, regulatory environment and the legal environment.

Risk Management Framework in an NPP Environment


The NPP operating organization comprises of three major sectors: safety, financial (commercial), and production (operation). These three sections form an intersection that agglomerates characteristics from each sector in such a way that decisions made in one sector affect the other sectors. Additionally, there are external stakeholders who have an impact on these sectors.

For each issue or event that requires a decision, managers can benefit from the adoption of a systematic approach of identifying the potential risks. This is possible due to looking specifically at the sector in which the proposal falls. They can also look at the intersection with other sectors to determine the extent of the decision. The major idea in this case is to identify all the consequences of a particular issue in order to find an optimal solution to minimize the adverse effects and maximize the social and business objectives in a cost efficient manner (Pagani, Smith & Apostolakis, 2004). Figure 2 below depicts the risk management framework that provides this systematic approach.

The Risks Management Process in NPP Environment

Step 1: Risk identification, measurement and assessment.

Nuclear power plant management is construed to numerous risks that originate from multiple sources. For instance, risks can come from such processes as social responsibility, training, and production, financial and outside influence. The main aim of the identification phase is to exploit the total number of risks that may be affecting the plant and avoid the retention of any risks that may be detrimental in the long run. Risk characterization is the next approach one ought to undertake after the identification of the risks that ail a plant. After the identification of the sources of risks one needs to characterize the risk (Jordao & Sousa, 2010).

Example of identification of environmental hazard: British Energy, UK.

Numerous companies have come up with frameworks for the identification and management of environmental hazards. For instance, the British Energy, UK has such a framework that requires each NPP to provide an inventory of the potential environmental hazards and their magnitudes. The decision essentially establishes the number and integrity of the barriers that are required to avoid the hazards.

Step 2: determination of appropriate risk management techniques.

This is an important step as it gunners to determine the appropriate techniques that can be used to inhibit the occurrence of a risk. The identified risks are then bundled in groups to determine the best possible approach to curb their occurrence. However, there are those risks that need to mitigate individually as they may not be linked to others. The three main generic categories of risk management techniques are retention of risks, reduction of risk and transfer of risk (Himanen, Julin, Holmberg & Virolainen, 2012). In practice, one or a combination of these methodologies can be used in risk management.

Example of reduction of risk: staging and laydown logistics planning for outages.

There exists great competitive pressure for plant owners and managers to put in place a mechanism that would curb or reduce the rate of outages in their respective plants. Financial performance of a given plant relies on the number of days a plant fully functions without any problems. For instance, if a plant shuts down on a specific day, it means that it would incur a loss as of that date. Thus, there is every need for plant owners to institute ways of ensuring that their plants run fully without any interruptions due to outages. Among the best approaches that plant owners can adopt are better logistics and planning to take into consideration any backup means (Himanen, Julin, J?nk?l?, Holmberg & Virolainen, 2012).

Step 3: Implementation.

At this step NPPs ought to implement the chosen strategies to curb the risks that materialize and inhibit other potential risks. Prior to implementation of the chosen strategy, it is important to conduct a check to establish whether the technique offers the required end result. The key aspects in this case are to assign responsibilities and accountabilities. It is essential to establish the milestones and checkpoints to allow thee verification of the responsibilities being met. During the implementation stage, the established milestones ought to be monitored on a regular basis.

Example of integrated decision support: nuclear asset decision analysis (NADA.)

NADA comes forth with an integrated system that streamlines all operations and activities of a plant to a clear set of goals and objectives. The alignment of multiple processes of a plant ensures that managers and plant owners are able to make decisions and follow up on them. Most of the tools used in this case encompass a larger majority of LCM programs that ought to be integrated appropriately by a professional.

Step 4: Monitoring and feedback.

In numerous cases the monitoring and feedback mechanisms are automatically built into the tool, in other cases a more formal feedback analysis is required. At this stage the main aim is to know the impact of use of these tool on the variable of interest. For instance, management would like to know whether there is a degradation or improvement of performance. One main purpose of monitoring and feedback is to help the utility recognize whether an exit strategy is required (Apostolakis, 2010). Another aspect of the monitoring and feedback process is the recognition of where the responsibility lies of overseeing the risk management program.

AECL adopts a decision making process applicable in multiple phases that include the design, configuration, proposal and the implementation phases. The process takes into consideration the analysis and evaluation of the direct impacts of the variables on parts of a company. The process calls upon the adoption of an exit strategy, it also demands a continual monitoring environment.


Risk management process is a very important approach for NPPs in the world. The high number of accidents experienced in the globe has necessitated the need to incorporate risk management strategies in plants. Additionally, the continued rise in number of nuclear plants calls for proper governance and management frameworks to be instituted, since nuclear plants may prove detrimental if managed improperly. The case of Chernobyl disaster of 1986 acts as a reminder on the impact of the risks in NPPs.

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