Development Bank of Japan
Research Report
No. 54

Improving Corporate Value through Disaster Management:
Prospects of Socially Responsible Investment (SRI)
for Disaster Reduction

July 2005

Economic and Industrial Research Department
Development Bank of Japan

This report was originally published in Japanese as Chosa No. 80
in March 2005.

Contents
Summary ........................................................................................................................................

iii

Introduction ...................................................................................................................................

1

I

Overview of Natural Disaster Conditions in Japan............................................................
1. Natural Disasters in Recent Years ....................................................................................
2. Major Risks of Earthquake ..............................................................................................

2
2
4

II

Improving Corporate Disaster Preparedness through Market Forces ............................
1. Framework for Disaster Reduction ..................................................................................
2. Why Market Forces?........................................................................................................
3. Disaster Reduction Business............................................................................................
4. New Types of Risk Financing ..........................................................................................
5. CSR and Disaster Reduction............................................................................................
6. Cooperation with Communities in Case of Disaster ........................................................

7
7
10
11
13
16
17

III Corporate Risk Management and Business Continuity Plan (BCP) ................................
1. Developments in Corporate Risk Management ...............................................................
2. Outline of Business Continuity Plan (BCP).....................................................................

20
20
21

IV Issues and Outlook of Corporate Value Improvement through Disaster Management .
1. Approach to Corporate Efforts for Disaster Reduction....................................................
2. Ideas on Disaster Rating ..................................................................................................
3. Disaster Rating Indicator .................................................................................................
4. New Methods of Business Evaluation .............................................................................
5. Development of SRI for Disaster Reduction ...................................................................

26
26
32
32
34
37

Conclusion......................................................................................................................................

39

References ......................................................................................................................................

40

Development Bank of Japan Research Report/ No. 54

iImproving Corporate Value through Disaster Management:
Prospects of Socially Responsible Investment (SRI) for Disaster Reduction
Summary
1. Japan is prone to various natural disasters
including earthquakes, tsunamis, typhoons andvolcanic eruptions. Great damage has beencaused recently by windstorms, floods andearthquakes, including the torrential rain in Niigata and Fukui and the Niigata-Chuetsu earthquake last year. With the imminent threat of major earthquakes in the Tokai region as well as in
the Pacific to the southeast and south of the archipelago, disaster reduction is now a top priority
in Japan. Disaster reduction efforts may be addressed from three perspectives: time (prevention,
disaster response and recovery/rehabilitation),space (global/national level, area level andzone/grid square level) and actors (public sector
and private sector). In terms of actors, such efforts may be classified into self-help, mutual aid
and public assistance. Self-help and mutual aid
efforts are becoming increasingly important as
public assistance is constrained due to tightbudgets in central and local governments. Under
these circumstances, businesses are now expected to play a leading role in building safe andsecure communities by working with other companies, local residents and the government. As
international competition intensifies, however,companies are narrowing the focus of investment
through selection and concentration, while curtailing costs to improve business efficiency. Thus,
they are reluctant to invest actively in disaster
reduction efforts, which do not produce any tangible short-term effects.
2. Legislative and other regulatory measures
are not sufficient to improve the resilience ofcorporations against natural disasters. It is imperative to evaluate properly corporate efforts fordisaster reduction, thereby creating an enabling
environment for voluntary and strategic approaches to disaster reduction. In so doing, thefollowing measures may be considered:(1) Companies should provides for disaster reduction investments as part of risk management and prepare a strategic BusinessContinuity Plan (BCP) to help return tonormality without undue business disruption
in case of a contingency. This should be
followed by risk financing to implement the
BCP, the promotion of cooperation with thelocal community, and the disclosure of corporate disaster reduction efforts in a specificaccount or report.
(2) Building on the measures described in (1)above, a mechanism should be created toensure social recognition of those companies making appropriate efforts for disaster
reduction (e.g. disaster rating of companies
and socially responsible investment for disaster reduction).
(3) Corporate activities for disaster reduction
should be expanded and promoted to provide a wide range of relevant products andservices.
3. There has been heightened interest in the
BCP since the 9/11 terrorist attacks in the UnitedStates. The significance of the BCP has been increasingly recognized in such previously overlooked areas as operating loss and impact on local employment. From the standpoint of a company, preparation of a BCP will ultimately improve corporate value by winning the confidenceof customers and discharging corporate social
responsibility in cooperation with the local
community. Some call for Japanese companies to
conduct BCP awareness-raising activities, as
they lag behind their European and Americancounterparts in business continuity planning.
However, a BCP on paper alone is unlikely toactually improve corporate resilience against
natural disasters. Steady progress in the preparation of a highly effective Japanese version of
BCP is needed, drawing on the disaster-related
expertise accumulated thus far in individualcompanies.

Development Bank of Japan Research Report/ No. 54

iii

4. Also, proper evaluation of the BCP andother comprehensive corporate efforts for disaster reduction (disaster management) is requiredfor promoting such efforts. Some indicators havebeen developed to evaluate existing corporate
disaster reduction efforts, building on the guidelines provided by the U.S. Federal Emergency
Management Agency (FEMA). Some indicators
evaluate overall corporate risks, while others,
including those published by the Fire Defense
Agency, concern the disaster resilience of communities. Recently, the Cabinet Office also announced that it would prepare indicators tomeasure corporate resilience against natural disasters. Introduction of any disaster rating will
have to address issues such as (1) the formationof social consensus, (2) divergence between theindicators and actual conditions, and (3) the development of proper, harmonized indicators.
Based on those considerations, a technique
may be proposed to evaluate comprehensively thefunctioning of a PDCA (plan-do-check-action)
cycle at each of the prevention, disaster response,
and recovery stages.
5. Traditionally, business management andevaluation thereof focused primarily on financial
indicators. In recent years, however, experiments
on various approaches have been conducted to
examine corporate management from thelong-term viewpoint, including CSR, risk management and intellectual capital. In Japan, any
risk management should consider earthquakes
and other natural disasters, as they have huge
impact on business management. Nonetheless,corporate response has been insufficient largely
due to the unpredictability of natural disasters
and the difficulty in making assumptions on possible damages. Although companies are willingto take measures against natural disasters, they
have found it difficult to establish a proper internal decision-making process due to the lack of
specific criteria, making it impossible to clarify
to the stakeholders the positive effects of disaster
reduction efforts. Disaster accounting and theiv

Development Bank of Japan Research Report/ No. 54

disclosure of disaster reduction efforts ensure
steady improvement in corporate disaster resilience and enable efficient business managementby analyzing the cost-effectiveness of disasterprotection investments. Such measures may also
increase corporate value by providing the stakeholders with quantitative and qualitative explanations of disaster reduction efforts. Nevertheless,some issues remain regarding disaster accounting
and similar practices:(1) Companies have to bear additional costs as
disaster data are largely underdeveloped.
(2) Appropriate indicators need to be developed
to measure the effect of disaster reduction
investments.
Actually, some companies disclose costs
and investments for disaster reduction in theirsustainability reports, along with descriptions of
relevant efforts.
As discussion on corporate social responsibility heats up, the significance of efforts fordisaster reduction needs to be clearly understoodin conjunction with the triple bottom lines of
economy, environment and society. Starting in
the environmental field, socially responsible investment (SRI) in Japan has expanded to sociality areas. Although it remains far below the scaleof Europe and the U.S., SRI in Japan is expected
to increase in the years ahead as interest in corporate social responsibility grows. In this context,
the introduction of SRI for disaster reduction will
have to be considered for assessing corporate
management in terms of disaster resilience, as
well as environmental soundness and sociality.
Most importantly, Japanese companies will beable to erase their concerns about the future risksof earthquakes and other natural disasters by advocating the adoption of SRI for disaster reduction as a global standard.
[Kentaro Noda (e-mail: kenoda@dbj.go.jp) and
Kazumasa Sato]Introduction
Japan is prone to various kinds of natural disasterincluding earthquakes, tsunamis, typhoons andvolcanic eruptions. Indeed, Munich Re recently
stirred controversy both in Japan and overseas
with its announcement that Japan, specificallyTokyo and Yokohama, has by far the highest riskof natural disaster among major cities in theworld. Frequent damages have been caused recently by windstorms, floods and earthquakes,
including the torrential rains in Niigata and Fukui and the Niigata-Chuetsu earthquake last year.
With the imminent danger of major earthquakes
in the Tokai region as well as in the Pacific to thesoutheast (Tonankai) and south (Nankai) of thearchipelago, disaster reduction is a top priority inJapan. Disaster reduction efforts may be classified into self-help, mutual aid and public assistance. Self-help and mutual aid efforts are becoming increasingly important as public assistance is constrained by budget difficulties in central and local governments. In particular, businesses are now expected to play a leading role inbuilding safe and secure communities by working with other companies, local residents and thegovernment. As international competition intensifies, however, companies are narrowing the
focus of investment through selection and concentration, while curtailing costs to improve efficiency. Thus, they are reluctant to invest actively
in disaster reduction efforts which do not produce any benefits in the short term.
Under these circumstances, legislative andother regulatory measures are not sufficient tomake corporations better able to withstand natural disasters. Thus, one effective approach would
be to ensure that corporate efforts for disaster
reduction are properly recognized, thereby creating an environment that encourages voluntaryand strategic disaster reduction efforts.
In light of the recent increase in the importance of the Business Continuity Plan (BCP), thisreport examines the current status of planningand identifies challenges for its diffusion. It also
explores ways to ensure that integrated efforts
for disaster reduction (disaster management) will
add value to corporations.

Natural Disaster Risk Index for the World’s Major Cities
City
Tokyo/Yokohama
San Francisco
Los Angeles
Osaka/Kobe/Kyoto
New York
Hong Kong
LondonParis
Mexico City
Beijing
Seoul
Moscow
Source:Risk index
710.0
167.0
100.0
92.0
42.0
41.0
30.0
25.0
19.0
15.0
15.0
11.0

City
SydneySantiago
Istanbul
Buenos Aires
Johannesburg
Jakarta
Singapore
Sao Paulo
Rio de Janeiro
Cairo
Delhi

Risk index
6.0
4.9
4.8
4.2
3.9
3.6
3.5
2.5
1.8
1.8
1.5

Compiled by Cabinet Office based on Munich Re Annual Report.

Development Bank of Japan Research Report/ No. 54

1I Overview of Natural Disaster
Conditions in Japan
1.

Natural Disasters in Recent Years

Major natural disasters in recent years include
the Great Hanshin-Awaji Earthquake in 1995,
which killed more than 6,000 people, the northern Miyagi earthquakes and the Tokachi-Oki
earthquake in 2003, as well as the Niigata-Chuetsu earthquake in 2004. The numerous
major earthquakes in the past caused substantial
casualties and property damages. Windstorms
and torrential rains have also caused major damages, including Typhoon Etau in August 2003,
with 19 people killed or missing nationwide, as
well as the torrential rains in Niigata/Fukushima
and Fukui in July 2004, with 16 and 4 people
killed or missing respectively. Flood damages inrecent years are too numerous to list, as the year
2004 saw a record number of typhoons landingin Japan (10). Damages caused by natural disasters including earthquakes and floods are outlined in Tables 1-1 and 1-2.
The Niigata-Chuetsu earthquake in October
2004 almost equaled the Great Hanshin-Awaji
Earthquake in scale, with a magnitude of 6.8 andthe maximum shindo (typical Japanese measure)of 7. Despite killing 40 people and damaging

over 130,000 buildings and houses (as of 29 December 2004, Table 1-3), the earthquake caused
relatively few casualties and property damages
for its scale, as it hit a mountainous rural area
where the population density is lower than in the
Kobe area and houses are solidly built to withstand heavy snowfall in winter. Nonetheless, theamount of damage totaled ¥3 trillion, almost one
third of the loss inflicted by the Great Hanshin-Awaji Earthquake (¥10 trillion).
The economic loss was also substantial as
the Chuetsu area is home to various industries
related to automobiles and semiconductors, local
industries including sake manufacture, as well as
agriculture, forestry and fishery activities such as
paddy rice growing, and carp aquaculture. Of thetotal loss of ¥3 trillion, commerce and industry
reportedly account for ¥300 billion, with agriculture, forestry and fishery representing another¥400 billion.
Table 1-4 shows the result of an on-site
survey conducted by the Niigata Department ofIndustry and Labor concerning the operation of
217 major local enterprises. Only 71% of thecompanies were able to return to the previous
level of operation three weeks after the earthquake, thus implying that the interruption ofbusiness had a considerable impact on the local
economy and employment.1

Table 1-1. Damages Caused by Natural Disasters in Recent Years
Casualties (persons)

Property damage (building units)

InjuredKilledMissing

Housing

Non-housing

Heavily

Lightly

Totalcollapse

Halfcollapse

Partially
damagedFlooded
above
floor

Flooded
below
floor

Publicbuildings

OthersTotalamount ofdamage(¥ million)

1999

137

4

304

1,394

531

3,844

113,074

14,95068,562

26,750950, 449

2000

76

2

187

618

621

3,696

21,50125,50659,722

4,107

604,909

2001

87

3

455

835

156

1,155

51,707

3,031

14,074370

1,180

436,081

2002

47

1

136

343

74

259

5,455

3,514

14,852248

4,276

365,021

2003

58

4

292

1,904

1,509

4,437

18,342

5,519

13,198331

10,015599,082

Notes:

1. Figures represent damages caused by windstorms, torrential rains, floods, tidal waves, earthquakes, tsunamis, volcanic eruptions or other abnormal natural phenomena.
2. Non-housing property damage has been classified into “public buildings” and “others” since 2001.
White Paper on Disaster Management, various years.

Source:1

For more information, see DBJ, “Immediate Report: Impact of the Niigata-Chuetsu Earthquake on Prefectural
Economy.”2

Development Bank of Japan Research Report/ No. 54

Table 1-2. Major Earthquakes in Recent Years

15/1/93

Kushiro-Oki

7.5

Total collapse(building units)
53

12/7/93

Southwest off Hokkaido

7.8

601

12/10/93
4/10/94
28/12/94

Far off Tokaido
East off Hokkaido
Far off Sanriku

6.9
8.2
7.6

61
72

17/1/95

Hyogo-ken Nanbu

7.3

104,906

1/7/006/10/00
24/3/01
26/5/03
26/7/03
26/9/03
23/10/04

Centered near Niijima and Kozushima
Tottori-ken Seibu
Geiyo
Centered off Miyagi Prefecture
Centered on northern Miyagi Prefecture
Tokachi-Oki
Niigata-Chuetsu

6.5
7.3
6.7
7.1
6.4
8.0
6.8

15
435

Date

Name

Magnitude

No. of people killed2
202
28 missing
1
3
6,433
3 missing
1
2

2
1,270
101
2,860

2 missing
40

Note:

The numbers of totally collapsed buildings and persons killed are based on the announcement of the Niigata Prefecture Emergency Taskforce Headquarters as at 29 December 2004.

Source:White Paper on Disaster Management, 2004.

Table 1-3. Damages Caused by 2004 Niigata-Chuetsu Earthquake
Casualties (persons)Non-housing(building units)

Housing (building units)

Other damages (no. of sites)

KilledMissing

InjuredTotal
collapse

Major
collapse

Halfcollapse

Partially
damagedPublic facilities+ others

Roads

RiversLandslides

40

0

4,559

2,860

1,663

9,341

89,381

34,899

6,062

229

442

Niigata Pref. total(15 cities, 31
towns, 14 villages)

Source:Announcement by Niigata Prefecture Emergency Taskforce Headquarters as at 29 December 2004.

Table 1-4. Recovery of Manufacturing Operations After Niigata-Chuetsu Earthquake
Operating rate0%

Under 50%

Under 70%

Under 100%

100%

4 November

24
11%

19
9%

21
10%

48
22%

105
48%

15 November

2
1%

7
3%

15
7%

38
18%

154
71%

Source:Industry and Labor Department, Niigata Prefecture.

Development Bank of Japan Research Report/ No. 5432.

Major Risks of Earthquake(i) Tokai, Tonankai and Nankai Earthquakes
Earthquakes may be classified into those occurring inside a plate and those occurring along an
oceanic trench which forms a plate boundary.
The former type includes the Niigata-Chuetsu
and Great Hanshin-Awaji earthquakes while thelatter type includes the Great Kanto Earthquake.
A trench-based earthquake occurs when the
distortion caused by the interaction of two plates
reaches a critical limit. This type of earthquake
may cause tsunamis if its epicenter is locatedunder the ocean. It may cause substantial damages over a vast area, with many people being
crushed to death under collapsed buildings.
Meanwhile, an earthquake on a plate occurs
when the distortion inside a plate caused by the
movement at a plate boundary reaches a criticallimit. Despite discharging less energy than atrench-based earthquake, it may cause substantial
local damages if its epicenter is located under adensely populated area.
Among the possible trench-based earthquakes, disaster reduction efforts are progressing
rapidly against the Tokai, Tonankai and Nankai
earthquakes due to their imminence, the potentially wide area affected and the scale of economic loss. The governmental Earthquake Research Committee predicts that the Tokai earthquake will occur sometime in the next 30 years
with a probability of 84%.2 The probability is
about 60% for the Tonankai earthquake, whose
epicenter will be near that of the Tokai earthquake, and around 50% for the Nankai earthquake (Table 1-5).
The Tokai and Nankai areas have been theepicenter of a major earthquake with magnitude

Table 1-5. Probabilities of Major Earthquakes (within 30 years)
Epicenter

Magnitude

Off Etorofu island
South off Sanriku near trench+/-8.1+/-7.7

In 10 yrs.
8-10%

Probability
In 30 yrs.
+/-50%In 50 yrs.
80-90%

30-40%

70-80%

90+%+/-50%

99%−+/-30%+/-70%+/-90%

12,000 killed*5¥112 trillion lost*6

10-20%+/-10%−+/-60%+/-50%
84%+/-90%+/-80%−

Coincidence
25,000 killed*7¥81 trillion lost

Coincidence+/-8.0
Off Miyagi Prefecture
Tokyo inland*1 (other earthquakes of magnitude 7 or overin southern Kanto)
TonankaiNankai
Tokai*2+/-7.5

6.7-7.2+/-8.1+/-8.4+/-8

Coincidence+/-8.5

Expected damages−
Coincidence(in Iwate Pref.)1,014 killed*3
Coincidence(in Miyagi Pref.)164 killed*4

Note:

*1
*2
*3
*4
*5
*6
*7

Compiled by DBJ from Earthquake Research Committee, “List of Long-term Evaluation of Active Faults andTrench-Type Earthquakes” (12 January 2005) for the major earthquakes with a probability of 50% or over within
the next 30 years. For more information, see Earthquake Research Committee website(http://www.jishin.go.jp/main/).
Earthquakes other than Taisho- and Genroku-types of Kanto earthquake.
The magnitude and probability of the Tokai earthquake used in the probabilistic seismic hazard map for western Japan.
Iwate Prefectural Government Report on Earthquake/Tsunami Simulation and Damage Assumption Survey (November 2004).
Miyagi Prefectural Government Report on Earthquake Damage Assumption Survey (March 2004).
Central Disaster Management Council, “Special Board of Inquiry concerning Earthquakes Centered Directly underTokyo” (published in December 2004).
Central Disaster Management Council, “Special Board of Inquiry on Measures concerning Earthquakes CenteredDirectly under Tokyo” (published in February 2005).
Central Disaster Management Council, “Special Board of Inquiry on the Tonankai and Nankai Earthquakes,” (published in September 2003).
2

The figure, which was used in the probabilistic seismic
hazard map for western Japan, has a lower reliability thanthe probabilities of other oceanic-trench earthquakes.

4

Development Bank of Japan Research Report/ No. 54

7 or over approximately once in every 100-150
years, including the Keicho (1605), Hoei (1707),
Ansei-Tokai/Ansei-Nankai (1854), Tonankai(1944) and Nankai (1946) earthquakes. The three
epicenter areas of Tokai, Tonankai and Nankai
were simultaneously destroyed by the Keicho,
Hoei and Ansei-Tokai/Ansei-Nankai earthquakes.
Moreover, the Nankai earthquake came only two
years after the Tonankai earthquake. This history
suggests that the distortion at the plate boundaryis dangerously near the critical limit. It is likelythat two or more earthquakes will happen at thesame time, probably triggered by the Tokai
earthquake, which may strike at any time. According to the Special Board of Inquiry on the
Tonankai and Nankai Earthquakes, the coincidence of the Tonankai, Nankai and Tokai earthquakes could cause up to 25,000 deaths, the totalcollapse of some 940,000 buildings and an economic loss of some ¥81 trillion.
The Special Measures Law on Earthquake
Disaster Prevention was enacted in 1978. Morethan 20 years on, the Government created in
March 2001 a Special Board of Inquiry on the
Tokai Earthquake under the Central Disaster
Management Council to improve preparedness
for the imminent Tokai earthquake. This wasfollowed by the establishment in March 2002 ofa Special Board to Prepare for the Tokai Earthquake. The risk of the Tonankai and Nankai
earthquakes was also discussed when setting up
the Special Board, effectively leading to the decision of the Central Disaster Management
Council in June 2001 to establish a similar Special Board on the Tonankai and Nankai Earthquakes. In May 2003, the Government presented
the General Guidelines on Tokai Earthquake
Preparedness at a meeting of the Central Disaster
Management Council, followed by the preparation of similar guidelines for the Tonankai andNankai earthquakes in December. In April 2002,
263 communities in eight prefectures were designated as Enhanced Earthquake Preparedness
Regions Related to the Tokai Earthquake. In
December 2003, 652 communities in 21 prefectures were designated as Enhanced Tonankai andNankai Earthquake Preparedness Regions, as
they were considered to be highly vulnerable to amajor earthquake.

Background Information
The Japan Meteorological Agency (JMA) announces a Tokai Earthquake Observation Report,
Tokai Earthquake Advisory or Tokai Earthquake
Warning when it has detected any anomaly that
may be related to the Tokai earthquake. When aTokai Earthquake Observation Report is issued,
residents should live as usual, taking necessary
measures according to the content of the information. A Tokai Earthquake Advisory is issued
when the anomaly is likely to be a precursor to
the Tokai earthquake. In this case, agencies related to disaster reduction bring necessary staff
together and secure an emergency communication system. Any requirement for preparatory
action in the Government will be made public,
including the establishment of a Prime Ministertask force, the dispatch of an advance team forgathering information, preparation for the dispatch of emergency, rescue and firefighting
teams, supply checks, as well as proactive measures for traffic control.
A further anomaly will trigger the JMA toconvene the Earthquake Assessment Committee(EAC) for the Areas under the Tokai Earthquake,a personal advisory panel for the Secretary-General of the JMA. A Tokai Earthquake
Warning will be reported to the Prime Minister,
who in turn will issue a warning declaration aftera Cabinet meeting. This will lead to immediate
establishment of earthquake disaster prevention
headquarters and local disaster prevention headquarters, each of which will ensure necessary
coordination to initiate emergency response
measures against earthquake disaster. In addition,
emergency, rescue and firefighting teams will bedispatched to the warning area as necessary,
preparations will be made for immediate dispatchof first-aid teams, and necessary traffic controls
will be implemented to ensure the loading of
supplies to relief vehicles and the availability of
area-wide transportation routes. When a disasterdoes happen, local emergency headquarters willbe established.3

3White Paper on Disaster Management, 2004.

Development Bank of Japan Research Report/ No. 54

5(ii) Inland Earthquake in Tokyo Metropolitan
Area
The southern Kanto region has been hit by anearthquake comparable to the Great Kanto
Earthquake (magnitude of 8 or over) once inevery 200 to 300 years, with several major inland
earthquakes (magnitude of 7 or over) in between.
According to the Earthquake ResearchCommittee of the Headquarters for Earthquake
Research Promotion, the probability of another
Great Kanto Earthquake is 0.9% for the next 30
years, but a major inland earthquake with a magnitude of seven or over is expected to occur inthe meantime with a probability of 70%.
Within the Government, the Central Disaster Management Council adopted the Outline ofDisaster Response Measures against the Southern Kanto Earthquake in December 1988, and theGeneral Guidelines on Preparedness for Inland
Earthquakes in Southern Kanto in August 1992,
both of which were revised in June 1998. In addition, a Special Board of Inquiry on Measuresconcerning Earthquakes Centered Directly underTokyo was established in September 2003 under
the Council. In December 2004, the Special
Board announced that an inland earthquake in
the Tokyo metropolitan area4 could kill up to120,000 people5 (64% of whom would be killed
by fire), totally destroy some 850,000 buildings(77% of which would be destroyed by fire) andprevent up to 6.5 million people from returning
home. This was followed in February 2005 byanother announcement that economic damage
may reach ¥112 trillion, almost ten times as large
as that caused by the Great Hanshin-Awaji
Earthquake. It has been identified that an earthquake at any of the 18 possible epicenters will

4

Here, an inland earthquake of magnitude 7 or over is assumed (with any of the 18 possible epicenters in the Kanto
region), and not an earthquake comparable to the Great
Kanto Earthquake, which strikes once in every 200-300
years.
5
The figure was revised upwards to 13,000 in February
2005.
6

Development Bank of Japan Research Report/ No. 54

cause much of the property damages and casualties by fire, demonstrating once again that concentrations of wooden houses pose major challenges for disaster reduction in the metropolitan
area. Also, an inland earthquake might cause
substantial economic disruption in the area,
where the headquarters of many large companies
are located.
(iii) Future Direction
Thus, expected damages have now been quantified for major earthquakes including the
Tonankai, Nankai and Tokyo inland earthquakes,
as well as the highly imminent Tokai earthquake.
Looking ahead, a national strategy will be established to address disaster risks, and disaster reduction efforts will continue among central government agencies and local authorities. Concretemeasures include the reinforcement of buildings
against earthquakes (including preventing thecollapse of concrete walls), measures to arrest
the spread of fire (promotion of fireproof construction), the designation of evacuation sites(facilities to be opened in case of disaster), thedesignation of escape routes for evacuees and thedevelopment of banks and breakwaters.
However, the government alone will not beable to cope with the Tokai and other major
earthquakes in terms of financial and human resources, as substantial damages will extend to avast area. Also in light of the inclusion of many
“self-defense” and “self-help” elements in thedisaster reduction measures, businesses and local
communities will be unable to totally rely on
government efforts and subsidies, and will haveto participate actively themselves.

II Improving Corporate Disaster
Preparedness through Market
ForcesFramework for Disaster Reduction

1.1. What is Disaster Reduction?
This section reviews the framework for disaster
reduction. Threats to security come not only
from natural disasters such as earthquakes, typhoons and tsunamis, but also from human negligence such as traffic accidents, building fires,
falling masonry, radioactive pollution, planecrashes and oil spills, and even from deliberateacts such as murder, robbery, terrorism and war.
In this report, “disaster reduction” refers tomeasures against unintended threats that may
cause widespread damage, and this chapter considers disaster reduction efforts in this context.
Threats to security
Small

Impact on lives, property and activities

Large

Traffic accidents

Earthquakes

Food accidents

Typhoons and heavy rains

CrimesBuilding fires

Aircraft accidents

Factory accidents

Scope of disaster reduction

Classification of disaster reduction by timing and impact

発災直後

Directly

発災 afterTiming: Occurrence
時間：occurrence

直接Directdamages
被害

復旧
Recovery/reconstruction
復興

災害
影響

Disaster impact

対
応

Scale

Scale

対
応

規模

Man人為
made

規模

Natural
自然

Reaction

Major disaster
大災害

Reaction

1.

The primary objective of disaster reduction
is to protect lives, property and economic/social
activities against disasters. Disaster reduction
efforts may be classified according to their objective (emphasis on saving lives, property or
economic/social activities), the cause of disaster(earthquake, typhoon/torrential rain, building fireor factory accident), timing of the efforts (prevention, emergency measures or recovery/reconstruction), scope (global/national level,area level or zone/grid square level) and primary
actor (public sector or private sector including
businesses). Current disaster reduction efforts
need to be realigned along these axes to address
any gaps or bottlenecks. For example, Figure 2-1
classifies disaster reduction according to timing
and impact.
On the horizontal axis time is divided into
the occurrence of the disaster, the period directly
after the disaster and the recovery/reconstruction

原因
Removal of causes
除去Frequency
頻度
Proactive efforts
発災前対応

Relief efforts
発災直後対応Recovery/reconstruction
復旧・復興対応efforts

Measuresto ensure that the process takes the downward route at each stage = disaster reduction.
それぞれの段階で「下向き」のルートに乗せる方策＝防災

Source:DBJ Policy Planning Note No. 9, “Disaster Reduction: What is Needed for a Safe Society?”

Figure 2-1. Concept of Disaster Reduction

Development Bank of Japan Research Report/ No. 54

7period. The vertical axis indicates the scale of thedisaster and its impact: the damage is greater
higher up the axis.
Disasters are classified into natural disasters
and man-made disasters. Proactive disaster reduction efforts in the pre-occurrence stage should
be focused on removing the causes of man-madedisasters. The damage may be eliminated (thethick downward arrow) or controlled (the thickarrow toward the lower right) through relief efforts directly after the occurrence. Any mismanagement will increase the scale of the disaster(the thin arrow toward the upper right). Reduction of the damage also depends on the successof recovery/reconstruction efforts.
The rightmost curve represents the typical
distribution of ultimate disaster scales. The objective of disaster reduction is to reduce the frequency of major disasters and the extent ofdamages by shifting the distribution downwards
and altering the shape of the distribution curvethrough appropriate proactive, emergency andrecovery/reconstruction measures.
1.2. Classification of Frameworks
Table 2-1 classifies the frameworks for disaster
reduction by timing, scope and actor. By timing,
disaster reduction is classified into the frameworks
of proactive, relief and recovery/reconstruction efforts. By scope, it may be classified into theglobal/national level, area level and zone/gridsquare level. At the global/national level, disasters have taken on a new dimension in recent
years. In 1999, semiconductor prices rose rapidly
in world markets after a major earthquake in
Taiwan, the principal supplier of semiconductors
to the world. In Japan, many plants account for
substantial shares in the global supply of theirrespective products. The impact of a shutdown ofthese production facilities due to a disaster would
spread well beyond the scope of the direct damage. As an example, the supply of brake parts for
Toyota was stopped by a fire at the plant of Aisin
Seiki in 1997, causing substantial secondary

8

Development Bank of Japan Research Report/ No. 54

damage. As such cases illustrate, businesses needto consider risks from a BCP standpoint and todiversify supply plants to prevent a disaster from
causing further damage.
At the area level, any damage to core local
enterprises may have grave consequences for the
local economy. One way to identify the potential
impact of a disaster on the local economy is tobuild a database on the geographical distributionof production sites in Japan. A comprehensive
regime for the collection, communication andanalysis of security information, including the
integrated Geographic Information System (GIS),
would also make a difference.
At the zone/grid square level, the importance of communities has been recognized. For
example, it was citizens themselves who eventually saved the most lives after the Great Hanshin-Awaji Earthquake. While citizens pulled out
tens of thousands of people buried alive, the Self
Defense Force, fire service and police reportedly
saved about only 5,000 people in total, although
the difference in difficulty of life-saving efforts
must be considered. Looking ahead, local authorities, businesses and nonprofit organizations(NPOs) will be required to work together for improving the disaster preparedness of communities.
Actors are largely classified into the public
sector and the private sector (including businesses). The public sector prepares disaster reduction plans and seeks to improve the quake
resistance of structures. It also plays a central
role in emergency response and recovery/reconstruction efforts. The private sector, on
the other hand, prepares for possible disasters
and works with the public sector in relief efforts
when a disaster does strike. The private sector
will be required to lead voluntary disaster reduction efforts, as the public sector alone cannot be
relied on to cope with a major disaster. This report focuses on how to improve the disaster preparedness of the private sector (including businesses).

Table 2-1. Classification of Disaster Reduction Efforts

By timing

By scope

Emergency measures

Recovery/reconstruction{ Identify emergencies to be
dealt with.
{ Remove causes of (manmade) disasters.
{ Minimize damages fromdisasters (proactive
measures).
{ Most effective disaster
reduction measures within
financial constraints andenvironmental
considerations.

{ Specify/prioritize emergencies
to be dealt with.
{ Prevent damages fromspreading.
{ Respond to unexpected events.
{ Prevent post-disaster disorder.
{ Prevent economic disruption.

{ Prevent indirect impact
from spreading.
{ Recover physical situation.
{ Recover economic andsocial situation (better
functions may be required
than before).

Global/national level

Serious damage to a domestic plant
affects domestic and overseas
production.

• Diversify plants.

(Globalization)

Area level

Serious damage to local
businesses substantially affects
the local economy.

• Utilize GIS (Geographic Information system).
• Create local industry disaster reduction
database (disaster reduction map).

(Information )Zone/grid square level• Buildings that only satisfy old
quakeproof standards.
• Renew urban concentrations ofwooden buildings.

• Community/business cooperation• Business cooperation• Community cooperation(Community)

Public sector
Publicassistance• Prepare disaster reduction plan.
• Proactive measures on land
management, living, industry
and logistics as well as theirinteraction through appropriate
utilization of forecast
information.

• Lifecycle management ofstructures• Failsafe measures• Repair and reinforce structures(measures commensurate withthe amount of risks, effective
use of existing stocks).

By actor

Mutual aid

Self-help

Private sector(businesses)

Source:Proactive measures• Prepare disaster reduction
manual/BCP.
• Disaster forecast/simulation• Physical reinforcement ofstructures• Physical diversification:correct excessive concentrationand ensure backup.
• Disaster accounting• Disaster reduction businessMutual aid• Coordinate volunteer efforts andmanage funds and relief aid.
• Delegate authority and ensure
cooperation between
organizations.

• Recovery/reconstruction plan
• Proper resource allocation(prioritizing)• Financial assistance and tax
relief• Emergency credit• Rescue, check the spread of fire.
• Prevent secondary disasters.

• Repair and renewal,
reinforcement of newbuildings• Evacuation/relief, information,
resource input (prioritization)• Avoid disruptions in industry,logistics and finance.
• Evacuation drills• Implement BCP.
• Backup offices.
• Repair and renewal• Utilization of financial
contracts

DBJ Policy Planning Note No. 9, “Disaster Reduction: What is Needed for a Safe Society?” partially revised.

Development Bank of Japan Research Report/ No. 54

92.

Why Market Forces?

As mentioned earlier, disaster reduction efforts
comprise self-help, mutual aid and public assistance. The scope of public assistance is constrained by the tight budgets of national and local
governments (Figure 2-2). Thus, businesses are
increasingly required to prepare themselves forpossible disasters through self-help and mutual
aid.
According to a survey of the Commercial
Property Research Institute, about one third of
office buildings in the Tokyo metropolitan area
were constructed under the old quakeproof standard, which is now deemed insufficient. Although the Government has been encouraging
upgrading them to fully quake-resistant buildings
under the Law on the Promotion of Quakeproof
Repairs, reinforcement works have made little
progress, largely because the law does not haveany enforcement clause. Thus, government regulations cannot be relied upon for improving disaster preparedness. One effective solution would
be to create an enabling environment for businesses to commit themselves to voluntary andstrategic improvement of disaster preparedness
by utilizing market forces for properly evaluating
corporate disaster reduction efforts (Figure 2-3).
Concrete measures include the following.

BudgetBudget(i) Prepare a Business Continuity Plan (BCP),
i.e. a strategic plan that provides for investment for disaster reduction as part of regular
corporate risk management to ensure thatcompanies can return to normal with minimum downtime in case of contingency. Thisshould be followed by risk financing for
BCP implementation, enhanced cooperation
with the local community, and the disclosure of corporate efforts for disaster reduction through disaster accounting and reporting.
(ii) Build a mechanism to ensure that companies
engaged in proper disaster reduction efforts
are properly evaluated (disaster rating, socially responsible investment for disaster
reduction).
(iii) Spread the various products and services
developed for disaster reduction throughcorporate activities.
The following sections examine various
ways to improve disaster preparedness by using
market forces.

Share(billion yen )Share in generalaccount budget
12.0%

8,000
7,000

10.0%

6,000
8.0%

5,000

6.0%

4,000
3,000

4.0%

2,000
2.0%

1,000

0.0%

0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02

Source:White Paper on Disaster Management.

Figure 2-2. Trend of National Budget for Disaster Reduction

10

Development Bank of Japan Research Report/ No. 54

Disaster reduction
business

Business
evaluation

Safety measures(improvement of
quake resistance,
etc.)

Investment for disaster
reduction

Recovery services(backup, cleaning,
etc.)

BCP

Information/safety
confirmation
services

Cooperation with local
community

Risk
financing

Disaster accounting andreportingCorporate risk management

Disaster rating

SRI for disaster
reduction

Source: DBJ.

Figure 2-3. Overview of Improving Corporate Disaster Preparedness throughMarket Forces
Table 2-2. List of Disaster Reduction BusinessType
Infrastructure
Information services

Major companies
Wellthy
Vending machine manufacturers and operators
Rescuenow.net
NTT Communications

Safety measures
Recovery services

Hoei Koki, Shizuoka Industrial Research Institute of Shizuoka Prefecture
Belfor (Germany)
HP (U.S.), IBM (U.S.), SunGard (U.S.), HP
Japan, IBM Japan

Description
Diversified water source system
Vending machines with electronic bulletinboardTransmission of disaster information, safety
confirmation system
Safety confirmation system using mobile
phonesDisaster-sensing bed
Cleaning for business restoration, etc.
Backup, consulting

Sources: Newspaper articles, etc.

3.

Disaster Reduction Business

3.1 Disaster Reduction Products and Services Created in the Market
Corporations have started to develop a range of
products and services associated with disaster
reduction (Table 2-2), although this trend has
only just begun.
The disaster reduction business mainly includes proactive types of anti-earthquake business such as quakeproof building design and reinforcement works. In recent years, the conceptof business continuity management (BCM) –how to ensure the continuation of businesses after a disaster – has gained greater attention, as
some companies now require prospective business partners to prepare a BCP before entering
into a contract. Consulting firms have therefore

launched support services for BCP preparation.
This section deals with typical types of disaster reduction business excluding generalquakeproof products and support for BCP preparation.
3.2 Examples(i) Diversified water source system
Filtered groundwater may be used as tap water
during normal times and in case of emergency
after a disaster. Groundwater including well water remained unaffected by the Great Hanshin
Earthquake and the Niigata-Chuetsu Earthquake,even though the water supply infrastructure wascompletely devastated. A system of diverse water sources is attracting attention as a quakeproof
water infrastructure.

Development Bank of Japan Research Report/ No. 54

11Water quality
monitoring
systemPre-treated water is further
filtered with a 0.1-micron
film.

Water pumped from a deep
well is stored in the original water tank.
As pre-treatment, water isfiltered to the level of tap
water.

Water is supplied to thereceiving tank.
Water is stored in thetreated water tank.

Safety design
In case of anomaly, the system will be automatically stopped and the supply will be switched to tap water.
Source:Wellthy website.

Figure 2-4(ii) Vending machines for disaster reduction
Vending machines with a built-in pager can provide real-time disaster information on an electronic bulletin board. Awareness of potential
disasters may also be raised by providing information on disaster prevention during normal
times. In case of an emergency or disaster, themachines could even dispense the products forfree. They are increasingly being introduced by
local governments.

(iii) Disaster-sensing Bed
In the Great Hanshin-Awaji Earthquake, 84% of
the people killed were either crushed or suffocated by collapsed buildings. Although the fundamental way to reduce earthquake damage is toimprove quake resistance, many households
cannot afford to do so, but a disaster-sensing bed
could provide a breathing space under a collapsed building or fallen furniture.

Source:Source:Chiyoda Ward website.

Figure 2-5

12Shizuoka Prefecture website.

Development Bank of Japan Research Report/ No. 54

Figure 2-6

(iv) Safety confirmation system
In times of disaster, it becomes difficult to establish phone connections as large numbers of people try to check the safety of their family members, friends, relatives and employees by using
fixed or mobile phones, thus overloading thecircuits. To avoid this, the NTT Group set up theEmergency Voice Mail Service, available in caseof a disaster and on the first day of each month.6
Other systems include the i-mode Disaster Message Board Service by NTT DoCoMo and thetext-mail safety confirmation services provided
by NTT Communications and Rescuenow.net,
among others. These services transmit text-mailmessages to all registered employees, enabling
the manager to efficiently check the safety of theemployees by counting the number of responses
on the system.
(v) Disaster recovery services
Disaster recovery services range from consulting,system backup and the provision of substitute offices to the restoration and cleaning of officeequipment damaged by fire or flood. According to
IDC, a private market research firm, thebackup/restoration service market is worth morethan $3 billion in the U.S., where the awareness ofrisk management is higher than in Japan due tothe existence of major risks including hurricanes
and other natural disasters, terrorism, and war.
However, even the best efforts to avoid disaster, such as improving resistance to quakes,
fires and flooding, might not be sufficient toprevent damages. In such cases, disaster recovery
services would allow businesses to get up andrunning again quickly and minimize economic
losses.
(vi) Refine Construction
The initiative “Refine Construction,” advocatedby architect Shigeru Aoki, deserves attention as
an innovative experiment at improving quake
resistance, by renewing the existing building
stock at low cost while improving its quake resistance. At present, almost half of all buildings
in Japan were constructed before 1981 and so
6

A trial campaign has been held on the first day of eachmonth since September 2004. The trial campaign is also
held during National Disaster Prevention Week (30 August-5 September).

probably have only the level of quake resistancethat was required under the old standard. The
quake resistance of this vast stock, including
civil engineering structures such as roads andbridges, needs to be raised. However, it would be
impossible to replace them all with new structures at once due to exorbitant costs and adverse
environmental impacts. Therefore, the concept oflife cycle management, as embodied by “Refine
Construction”, should be considered.
(vii) Consideration of a “disaster reduction label”
At a meeting of the Special Board of Inquiry on
enhancing disaster management by utilizing theprivate sector and markets, the Central Disaster
Management Council recommended the consideration of a framework for granting a “disaster
reduction label” to products and services thatserve to prevent disasters.
Just like the eco-label in the field of the environment, this disaster reduction label is designed to raise the awareness of disaster preparedness among consumers by providing them withclear choices for disaster reduction (= safety). It
is also hoped that adding the new value of disaster preparedness will help reactivate markets related to disaster reduction, and eventually lower
the costs of goods and services for disaster prevention, which in turn will promote the diffusionof such goods and services.
4.

New Types of Risk Financing

4.1 Outline of Financial Schemes(i) Contingent debt facility (CDF)
The substantial compensation payouts made following successive disasters in the 1990s caused
some insurance and reinsurance companies to go
bankrupt, thus raising premium rates. New
methods of disaster risk management have thus
been considered, including the securitization ofdisaster insurance, which allows diversificationof disaster risk beyond the reinsurance market
and into the far larger financial markets. The
hedging of insurance risks in the financial market
involves “risk financing” techniques. Backed by
the development of financial engineering andimproved techniques for evaluating natural disasters and other risks, the use of risk financing is
expected to spread in the years ahead.
Development Bank of Japan Research Report/ No. 54

13

A disaster will not only cause direct financial losses in the form of declining asset values,
business interruption or cash crises, but also haveindirect effects including damaging financial
conditions through the decline in share prices
and ratings. Such financial risks require a propermix of techniques including earthquake insurance, funds on hand (cash and deposits) and risk
finance.
An earthquake in Tokai or directly under the
Tokyo metropolitan area would cause very serious damage, making insurers reluctant to enter
the corporate earthquake market in the two regions. Moreover, an earthquake policy only covers property losses such as the collapse of buildings and not the cash crisis that will be triggeredby reduced sales due to shutdowns. In order toaddress this situation, a contingent debt facility(CDF) typically undertakes to provide a loan thatwill cover part of the essential funds required forrecovering from a major earthquake. Earthquake
risk is quantified in determining the applicableinterest rate, and the loan thus provided may be
used as relief funds following an earthquake.
This type of risk financing would also demonstrate to stakeholders that the company is prepared for major disasters including earthquakes.
The Development Bank of Japan, in cooperation with the Shizuoka Bank and Mitsui Sumitomo Insurance as loan arrangers, has ex-

Advisor(Mizuho Securities)

tended a CDF-syndicated loan to Tomoegawa
Paper (Mizuho Securities as advisor) (Figure2-7)7 It is expected that more companies will
follow suit and consider integrating the CDF into
their business continuity planning to supplement
earthquake insurance.
(ii) CAT bond
A CAT bond is designed to transfer catastropherisk (risk of major disasters including earthquake
and flood) to investors through securitization.
Money invested in an issued bond is reinvested safely in a trust account (usually opened
in a tax haven). In case of an earthquake whose
scale exceeds a predetermined level, the investor
loses the right to redemption and the money will
be paid directly to the issuer. Payments to theinvestor in exchange for the risk of expropriation
represent the insurance premiums for the issuer.
When no earthquake insurance is available,
CAT bonds offer another means of risk financing,as they can collect funds immediately throughthe vast bond market.
Japanese issuers of CAT bonds include
Oriental Land and the mutual aid union of Japan
Agricultural Cooperatives (Zenkyoren).
The characteristics of earthquake insurance,
CAT bond and contingent risk facility are summarized in Table 2-3.

Risk-free assets(2) Syndicated loan

(1) Loancommitment

1 billion yen

Originator(Tomoegawa
Paper)

Loan investors(Mitsui Sumitomo Insurance,
Shizuoka Bank, etc.)

SPC
3 billion yen(3) Commission
debt guarantee

Loan disbursed after earthquake
Earthquake risk analysis(applied RMS)

Source:(3) Debt guarantee

DBJ

DBJ website.

Figure 2-7. CDF Scheme
7

14

Development Bank of Japan Research Report/ No. 54

http://www.dbj.go.jp/japanese/release/re12004/1108_pfi.html

Rating firm
(1) Money transfer contract

Issuer(6) Premium(8)’ Payment(2) Rating(3) Purchase
Bond-issuing SPC(7) Coupon+premium(8) Redemption at maturity(4) Trust contract(5) Investment(8)’ Disaster

Trust accountSource:Investor

AAA rated securities

DBJ.

Figure 2-8. CAT Bond Scheme
Table 2-3. Comparison of Risk Finance Techniques
Period
Cost
Payment
availability
Immediatepayment
Problems

Earthquake insurance
Short term (1-2 years)
Premium revised annually

CAT bond
Possibly long term (about 10 years)
Cost defined as premiumWorld reinsurance market:¥10 trillion
Subject to assessment
procedures
Limit in underwriting
capacity

World bond market: ¥3,000 trillion
Risk-free as secured funds
Immediate payment under trigger
conditions
Precision of disaster model.
Basis risk
Zenkyoren: ¥55 billion
Oriental Land: ¥20 billion

OthersContingent risk facility
Possibly long term
Interest rate determined byearthquake preparedness
High
Immediate payment under trigger
conditions
Precision of disaster model
Basis risk
Oriental Land: ¥10 billion
Tomoegawa Paper: ¥4 billion

Sources: Newspaper articles.

(iii) SRI fund for disaster reduction (OMYFund)
OMY refers to the 111 ha area around Tokyo
Station comprising Otemachi, Marunouchi and
Yurakucho districts. The OMY area is one of thelargest business districts in Japan, with 4,100
companies employing 240,000 workers and representing 20% of GDP. Any disaster in this area
would cause extensive disruption, due to not only
direct damages but also business shutdowns.
The OMY Fund, which is still at the planning stage, is an SRI fund for disaster reduction
designed to improve the disaster preparedness
and business continuity in the whole area by investing in companies that have developed good
disaster reduction capacities through self-help
and mutual aid efforts. Expectations are high forthe creation of the Fund as socially responsible
investment (SRI) progresses, led by the“eco-funds” that invest in companies actively
involved in environmental conservation.8
4.2 Assessment of Earthquake Risk in Real
Estate Securitization
Real estate securitization means to invite investors who will be given the right to receive thevalue of the property itself as well as the rent.
With the launch of J-REIT in 2001, the market
has been expanding as companies seek to move
corporate assets off the balance sheet in view of
the introduction of depletion accounting in 2005.
Real estate securitization has also been used as afinancing technique by companies that experience difficulty in issuing bonds or obtainingbank loans due to their poor financial standing.
In securitizing real estate, the property has
8

See Chapter IV for details.

Development Bank of Japan Research Report/ No. 54

15to be evaluated properly from a holistic viewpoint, taking into account applicable laws andregulations, the trend of the real estate market,
environmental aspects including soil pollution,
earthquake resistance and topography (due diligence). The result of due diligence is then presented to rating firms and potential investors forconsideration.9 Thus, disaster prevention measures including quake resistance improvement
will raise the value of property through the due
diligence process.
5.

covers multiple aspects including corporate ethics, compliance, support for civil society andmecenat (support for art activities). Although
Japanese companies have long been involved insuch initiatives, the recent spate of corporate
scandals has led stakeholders including consumers and shareholders to express their concerns
about corporate ethics and compliance.
For instance, assessments of earthquake resistance should be made and appropriate measures for compliance should be taken, eventhough the Law on the Promotion of Quakeproof
Repairs does not have any enforcement clause.
Any casualties in a building that does not comply
with the law may trigger lawsuits. In one case,repair and rehabilitation works as well as tenant
movements suddenly stepped up after the district
was designated as a potential disaster area. These
examples demonstrate that businesses are required to take measures that go beyond merecompliance.
Future CSR will be required to reconcile thepursuit of profits with environmental and social
considerations for the attainment of a sustainable
society. With regard to disaster reduction, CSR
will have to consider the security of the local
community, local economy, employment andimpact on the stable supply of goods and services,
as well as protecting the company’s own assets
against any disaster (Figure 2-9).

CSR and Disaster Reduction

The issue of corporate social responsibility(CSR) has been much discussed in recent years.
With the emergence of various stakeholders in
the changing social environment, businesses are
realizing that they must broaden their focus fromthe pursuit of profits to environmental and social
concerns if they are to avoid damage to their
credibility, brand image or even corporate value.
CSR is designed to strike a proper balance
between economic, environmental and social
considerations. As global warming has come tothe fore, more companies have become involvedin environmental initiatives in recent years, developing environmentally sound businesses andproducts (services) in many cases. But what are
the social aspects? In fact, social responsibility

CSR (corporate social responsibility)
BCP (business continuity plan)
JIS (Japanese Industrial Standards)
Legislation
Source:DBJ.

Figure 2-9. Overview of Corporate Efforts for Disaster Reduction
9

Reportedly, any probable maximum loss (PML) of over
20% will affect the rating in securitization.

16

Development Bank of Japan Research Report/ No. 54

6.

Cooperation with Communities in Case ofDisaster

6.1 Cooperation with Local Governments
Local governments have the most important roleto play as providers of “public assistance” in atime of disaster. As proven by major disasters in
the past including the Great Hanshin-Awaji
Earthquake and the Niigata-Chuetsu Earthquake,
however, the scope of public assistance becomes
limited in larger disasters.
Citizens and businesses have huge potential
for providing mutual aid by ensuring their own
security and confirming the safety of family
members and employees themselves. As highlyorganized groups, companies could make aneven greater contribution than the public assistance provided by local governments, if they
could provide their skills and facilities for mu-

tual-aid purposes.
To achieve this, businesses should build a
network with the local community and government during normal times to improve the disaster
preparedness of the whole area. The following
are some examples of cooperation between local
governments and businesses.
(i) Agreements on the supply of daily commodities and fuelAgreements with convenience stores, supermarkets and gas stations to supply sufficient food,daily commodities and fuel in case of a majordisaster.
(ii) Agreements on the restoration of transport
infrastructure
Agreements with the construction and civil engineering industries to provide support when

Table 2-4. Major Agreements between Local Governments and Businesses
Objective
Supply of daily commodities

Local authorities

Business entities

Tokushima Prefecture

Tokushima Sogo, Lawson, Sunkus and Associates, etc.

Shiga Prefecture

Family Mart

Fujinomiya City, Shizuoka Prefecture

Asahi Soft Drinks

Kobe City and other 19 cities and7 towns

Coop Kobe

Atsugi City, Kanagawa Prefecture

Sapporo Beer and Beverage, JA Ehime

Wakayama Prefecture

Seven Eleven Japan

Fuel supply

Tokushima Prefecture

Tokushima Petroleum Dealers Association

Restoration of transport
infrastructure (rubble removal, etc.)

Nerima Ward

Nerima Constructors Association, Tokyo Automobile Service Promotion Association – Nerima Branch

Provision of evacuationsites and accommodationof stranded people

Transport routes

Wakayama Prefecture

Wakayama Constructors Association

Saitama Prefecture

Saitama Japan Industrial Waste Association

Shizuoka Prefecture, Shizuoka
Prefectural Police

Shizuoka Towing Service Association, Shizuoka Towing Service
Cooperative

Saitama Prefecture

Saitama Petroleum Dealers Cooperative, Urawa Tobu Hotel andother 4 sites

Nagoya City

NoritakeTokyo Metropolis

Tokyo Petroleum Dealers Association

Shinjuku Ward

Waseda Univ., Gakushuin Univ., etc.

Chiyoda Ward

Meiji Univ.

Chiba Prefecture

Chiba Petroleum Dealers Association

Wakayama Prefecture

Nankai Ferry

Shizuoka Prefecture

Japan Highway Public Corporation

Shizuoka Prefecture

All shipping companies operating in the prefecture.

Tokushima Prefecture

Tokushima Trucking Association

Loans for living expenses

Shizuoka Prefecture

Shizuoka Bank, Shimizu Bank, Suruga Bank

Disaster information

Koto Ward

Tokyo Bay Network, Rainbowtown FM Broadcasting

Sources: Newspaper articles.

Development Bank of Japan Research Report/ No. 54

17roads become impassable due to cave-ins or obstacles.
(iii) Agreements on evacuation sites and the accommodation of stranded people
Agreements with hotels and other private companies and universities to open up their facilities
as temporary shelters in a time of disaster.
Agreements are also concluded with gas stations
for accommodating stranded people.
(iv) Agreements on transport routes
Agreements are concluded with shipping companies to transport daily commodities and relief
workers to isolated areas where access by road or
railway has been cut off.
(v) Agreements on loans to cover living expenses
Prior agreements to enable disaster victims to
obtain loans for living expenses without delay
even in the chaos following a disaster.
(vi) Agreements on disaster information
Agreements with TV and radio stations to givepriority to disaster information over normal programming.
6.2 Community Disaster Reduction though
Cooperation among Businesses
In addition to cooperation between local governments and businesses, the resilience of communities needs to be built through cooperation
among businesses. There are many cases ofbusiness cooperation in Japan to improve thedisaster preparedness of communities, as shownby the examples below.
(i) Liaison Group to Prepare for Major Disasters (Fuji, Shizuoka Prefecture)
The City of Fuji has a large concentration of paper and chemical-related plants, and so local
residents and governments requested businesses
to take measures to minimize secondary disasters
such as plant explosions and fires following a
Tokai earthquake, as well as primary damages.10
10

According to the Third Assessment of Earthquake Damages conducted by the Shizuoka prefectural government, aseismic intensity of lower 6 or over on the Japanese scale
will be registered in Fuji in case of a Tokai earthquake,
18

Development Bank of Japan Research Report/ No. 54

However, individual companies did not know
where to start, and many did not even have anofficer in charge of disaster reduction. The Fuji
Chamber of Commerce and Industry therefore
created in April 2004 a Liaison Group to Prepare
for Major Disasters. This organization includes
some 30 companies that volunteered to join theGroup, as well as local authorities including the
Shizuoka prefectural government and the Fuji
municipal government.
The aim of the Group is to raise awareness,build expertise and consider concrete measures
to be incorporated in a manual through exchange
and sharing of issues and information among
responsible corporate officers, thereby improving
the disaster preparedness of the community as awhole. The Group provides the participatingcompanies with an opportunity to share disasterprevention measures, information on disaster risk
management and relevant skills. The prefecturaland municipal governments and the Chamber ofCommerce and Industry also expect the Group toplay a key role in sustaining the local industry, as
well as in providing security to the whole community, as it is clear that an earthquake would
have a huge impact on the local economy andemployment if the community was not prepared.
(ii) OMY Neighborhood Association for Disaster Reduction (Chiyoda Ward, Tokyo)
As mentioned earlier, the OMY area – Otemachi,
Marunouchi, and Yurakucho – is the heart of theJapanese economy, accounting for some 20% of
GDP.
The Tokyo metropolitan government estimates that a strong earthquake directly under themetropolitan area, which is considered to have a
70% probability of occurring within the next 30
years, will leave some 600,000 people stranded
in Chiyoda Ward alone. Along with preparing
the area for disaster, how to accommodate thosestranded people is a major issue to be solved.
This issue is being addressed by the Association for the Accommodation of Stranded People in Tokyo and Yurakucho Station Area(“Neighborhood Association for Disaster Reduction”) – a group of some 60 companies operatingin the OMY area led by Mitsubishi Estate, theresulting in the collapse of 6,745 buildings.

largest landowner in the district.
A comprehensive emergency drill wasco-organized in January 2005 by the Neighborhood Association and Chiyoda Ward to ensure
the safe and early return home of stranded people
when a strong earthquake directly hits the area.
Training activities included escape guidance,
safe return home and cargo shipment by the Self
Defense Force.

Development Bank of Japan Research Report/ No. 54

19

III Corporate Risk Management
and Business Continuity Plan (BCP)
1.

Developments in Corporate Risk
Management

1.1. Developments in Japan
Following the Great Hanshin-Awaji Earthquakeand subsequent incidents, accidents and scandals,
the Guidelines for development and implementation of risk management systems was published
as a Japanese Industrial Standard in March 2003.
The Guidelines describe typical techniques tosupport risk and crisis management by companies and local governments. They define risk
management as a framework of corporate management comprising the involvement of management, the establishment of routine measuresand the development of human resources, andsuggests that resilience be continually strengthened by repeatedly applying the PDCA
(plan-do-check-action) process to risk management. Although the Guidelines define a managerial framework as in the case of ISO14000 (environmental management system) and ISO9000(quality management system), they do not offer acertification system but rely on voluntary efforts
by corporations. The Guidelines comprise thefollowing seven principles: (i) risk management
policy, (ii) risk management planning, (iii) implementation of risk management, (iv) assessment of the performance and effectiveness ofrisk management systems, (v) correction and improvement of risk management systems, (vi) review by the CEO and (vii) system and mechanism for maintaining the risk management system. Continued improvement is possible bystarting with the development of an organism ormechanism (Principle vii) and then repeating
Principles i through vi within its framework.11
The Guidelines cover all entities including businesses and local governments.
Elsewhere, the METI Study Group on Risk
Management and Internal Control issued in July
2003 the “Guideline for Internal Control That
Functions Together with Risk Management.”

The Guideline defines risk management as “aseries of company activities that appropriately
manage various internal and external risks associated with its business, in the course of corporate management, to maintain and augment its
value” and internal control as “a system or aprocess established and operated in a company tocarry out its business properly and efficiently.” Italso stresses the need to integrate internal control
and risk management by stating that these twoconcepts, which have grown out of different
backgrounds, share broadly the same objectives
from the standpoint of preserving and enhancing
enterprise value by responding to a variety ofrisks surrounding companies.12
1.2. Developments in the U.K.
In 1994, the U.K. Business Continuity Institute(BCI) was established to draw up guidelines on
business continuity management (BCM) andtrain BCM experts. The BCI is a membershiporganization with 1,650 members in 45 countries
worldwide, including Asian economies such as
Hong Kong, Singapore, Thailand and Japan aswell as those in Europe and North America.
The “Guide to Business Continuity Management” prepared by the BCI in 2002 assumes
that BCM will be effectively implemented
through a cyclical process comprising the following five stages: (i) understanding one’s business, (ii) building BCM strategies, (iii) developing and implementing a BCP, (iv) establishing
the BCM culture and (v) implementing and updating the BCM. Published as PAS (Publicly
Available Specification) 56 of the British Standards Institute (BSI), the Guide is the first topresent a comprehensive idea of BCM, for which
no unified concept or concrete techniques had
existed.
Currently, there is a trend toward global
standardization of risk management. As the BCI
has moved closest to standardization, it encourages the International Organization for Standardization (ISO) to follow suit. With similar
encouragement by the U.S., the ISO is now
moving toward drawing up guidelines.13 Discus12

11“New Corporate Management and Risk Management:
Guidelines for Building a JIS Risk Management System
JISQ2001,” Tokyo Marine Risk Consulting.

20

Development Bank of Japan Research Report/ No. 54

White Paper on International Economy and Trade 2004.
The matter is currently being considered by theHigh-level Advisory Group on Security established under
the Technical Management Board (TMB).
13

sion on standardization needs to consider culturaldifferences among nations. As far as risk management is concerned, Japan should make its position clear on earthquakes and other disasters
that have a major impact on its territory and people, while introducing foreign techniques as
deemed appropriate.
In Japan, the BCI Japan Alliance was established in December 2003, following the certification of InterRisk Research Institute as BCI’s
Japanese branch. The Alliance has been involvedin awareness-raising activities, providing BCM
information to businesses, government ministries
and agencies and universities.
In September 1999, the Institute of Chartered Accountants in England and Wales(ICAEW) published the Turnbull Guidance, 14
which calls for the integration of risk management and internal control. The London Stock
Exchange requires listed companies to comply
with the Turnbull Guidance for business years
ending 23 December 1999 or later, thus virtuallyrequiring corporations to take measures for risk
management.
1.3. Developments in the U.S.
Activities to promote risk management, althoughless comprehensive, have also been taken in the
U.S., mainly by the BCI, DRII15 and the FEMA
(Federal Emergency Management Agency) 16 .
Following a series of corporate scandals, five
major accounting associations also launched an
initiative to consider internal control matters inJune 1985 by establishing a Committee of Sponsoring Organization of the Treadway Commission (COSO). In its report published in October
1987, the National Commission on Fraudulent
Financial Reporting stated, “top management
first must establish the proper environment, one
in which fraudulent financial reporting is lesslikely to occur and, if it does occur, is more
14
The Turnbull Guidance, issued by the ICAEW in September 1999, aims at promoting the introduction of risk
management and internal control systems by companies(InterRisk Research Institute “Disclosure of Risk Management Information in U.K. Companies: Outline of Turnbull
Guidance,” Corporate Risk Information, Vol. 9).
15
Established in 1988, DRII (Disaster Recovery InstituteInternational) operates a certification system for business
continuity managers.
16
See Chapter IV, Section 1, 1.2 (i).

likely to be detected.” In line with this report, the
COSO
published
theInternal
Control—Integrated Framework (COSO report) in1992. The idea of the COSO report, referred to in
the BIS Guideline as well as in the U.S. andJapanese auditing standards, has now become thede facto global standard on internal control. Furthermore, the COSO Enterprise Risk Management Framework, prepared in 2003, seeks to integrate risk management with internal control.
Moreover, it is now a statutory obligation
under the Sarbanes-Oxley Act of 2002, in orderto restore the reliability of financial reporting in
response to a series of financial scandals, forcompany management to attach certification on
the effectiveness of disclosure controls and procedures, and to assert internal control over financial reporting with an attestation by an independent auditor when filing registration documents with the SEC.17
2.

Outline of Business Continuity Plan
(BCP)

2.1. What is BCP?
A business continuity plan (BCP) is a management strategy to resume critical operations in the
shortest possible time following any businessinterruption due to contingency and thus preventthe subsequent loss of customers, decline inmarket share and deterioration in corporate
reputation by taking necessary measures to prepare for emergency situations such as the development of a chain of command, backup system,
the training of substitute personnel, arrangements
for immediate safety confirmation and the
preparation of manuals. Therefore, BCP is at thecore of corporate risk management. Making proactive plans for providing priority products andservices in an emergency would raise the confidence of customers and ultimately improve thecompany’s value.

17“Internal Control in the New Era of Risks,” Study Groupon Risk Management and Internal Control, June 2003.
Development Bank of Japan Research Report/ No. 54

21

Business continuity plan (BCP)
Preventing a decline in operating ratio/market share and shortening the recovery time after a crisis
Pre-crisis

CrisisOperating ratio/market share

RecoveryInitial respons

100%

Source:Post-crisis

Tolerance limit
Time axis

Objective
Current recovery curve
Recovery curve after BCP

Deviation of current status from objective

Cabinet Office, “Basic Recommendations for Disaster Reduction Strategy by Utilizing the Private Sector and Markets.”

Figure 3-1. Outline of BCP
A BCP is typically managed and improved through the following management cycle.
Setting objective ⇒ Risk assessment ⇒ Business impact analysis ⇒ Preparing BCP⇒ Monitoring ⇒ Process improvement ⇒ Modifying objective
The following matters need to be considered in risk assessment.
Risk Assessment – Case of an Earthquake○ Measures to prevent casualties* Can casualties be avoided?
○ Physical loss
* Physical loss, including buildings and machinery inside buildings, may be estimated on thebasis of assumed scale of the earthquake, the extent of quake resistance and the current statusof securely fixing machinery.
○ Impact on business* Operating loss = shutdown period (days)/365×operating profits* Shutdown period is to be estimated in light of the company’s operational flows.
* Total loss may be estimated by specifying the flow of each process in the company.
* Risk associated with operational procedures for recovery* Impact on finance○ Decline in brand value* Secondary damage including complaints* Harmful rumors

22

Development Bank of Japan Research Report/ No. 54

BCPs range from formal plans prepared as
requested by foreign companies and rudimentary
ones that are no more than the revised versionsof traditional disaster prevention or crisis management manuals, to full-fledged plans incorporating a management cycle that enable responses
to expected scenarios as well as field elements
including the flow of internal control. BCPs aredifferent from traditional disaster prevention
plans and crisis management manuals in thatthey are linked with corporate management
through the definition of priorities in emergency
situations. Nonetheless, some companies have
prepared a disaster prevention plan that is closer
to a BCP, incorporating a process leading to reconstruction or recovery. However, BCP refers
to a plan that addresses not only earthquake risk
but also various other risks such as terrorism and
SARS. Very few Japanese companies appear tohave developed a BCP in this sense.

Business continuity and recovery planning at financial institutions• Scenario analysis
Although many financial institutions have undertaken scenario specification and impact assessment for eachscenario, few have conducted an assessment on the probability of each scenario.
• Distance between main center and backup center
20-50 km in most cases. Many financial institutions ensure a distance of over 200 km for deposit and foreign exchange systems.
• Switchover time
In most cases, one to four hours are required to complete the switchover to the backup center or backup office. For deposit and foreign exchange systems, the switchover may take more than 24 hours in many cases.
• Training
As emergency drills, many companies have introduced training on the setup and operation of system
backup equipment and data input and output. However, few companies involve domestic office staff or external partners in such training.
• Outsourcing
43 of the 68 companies covered by the survey (63%) responded that they would use outsourcing in case ofdamage to their computing centers. 36 companies (53%) would do so in case of damage to business offices.
Source:Bank of Japan, “Questionnaire Survey on Business Continuity and Recovery Planning in Emergency Situations.”

Japan

U.S.
No BCP
7.0%

BCP alreadyin place
21.6%
BCP under
preparation
28.0%

No BCP
55.7%
BCP under
preparation
22.7%

Note:
Source:

BCP already in
place
67.0%

The total of percentages for the U.S. exceeds 100% in the original data.
KPMG Business Assurance, “Business Continuity Management (BCM) Survey Report 2004.”

Figure 3-2. Business Continuity Planning in Japan and U.S.

Development Bank of Japan Research Report/ No. 54

23

2.2. BCP-related Developments in Japanand Abroad
It was the 9/11 terrorist attacks in the U.S. that
focused attention on BCP for the first time.
Merrill Lynch and other companies located near
the World Trade Center were able to minimize
interruption of business by using backup offices
secured under their BCPs. Elsewhere, the BaselCommittee on Banking Supervision placed renewed emphasis on the need for BCPs in “Sound
Practices for the Management and Supervision of
Operational Risk” published in July 2002. Thosedevelopments apparently have encouraged thedevelopment of BCPs by companies.
In Japan, the Bank of Japan published in
March 2002 “Business Continuity Planning on the
Assumption of Damage to Financial Institution
Headquarters.” This was followed by a questionnaire survey on the current status of business continuity and recovery planning, the results of whichwere made public in June 2003. The results indicated that more than half of financial institutions
have introduced some kind of contingency planning, but that there are considerable differencesamong those institutions regarding the distance
between the main center and the backup centerand the time required for switchover.
Elsewhere, the aforementioned Working
Group on Businesses and Disaster Reduction
stated in “Businesses and Disaster Reduction:
Future Challenges and Directions” published in
April 2003 that conditions needed to be improved to promote business continuity planningas part of corporate risk management. The Ministry of Economy, Trade and Industry (METI)
has also proposed the preparation of BCP guidelines in its Research Group on Corporate Information Security Governance.
There has been little analysis of the linkage
between business continuity and corporate rating.
As the importance of business continuity increases in corporate management, however, it islikely that business continuity will also influence
corporate ratings.18
A 2004 survey conducted by KPMG Business Assurance (Figure 3-2) indicates that 67%
18“Business Continuity: Corporate Crisis Managementfrom the Viewpoint of Rating Agencies,” Exchange Square,
October 2003.
24

Development Bank of Japan Research Report/ No. 54

of U.S. companies have prepared a BCP, a sharethat rises to 95% if those companies currently
preparing a BCP are included. In contrast, only
21.6% of Japanese companies responded thatthey had prepared a BCP. Even if the companies
preparing a BCP are included, this share remains
at 44.3%. Thus, there is a wide discrepancy between Japanese and U.S. companies regarding
business continuity planning. Japanese companies need much greater awareness if they are to
universally adopt a BCP.
2.3. Background for Business Continuity
Planning(i) Requirements from abroad
Since 9/11, business continuity planning has
made substantial headway in Europe and North
America, with many companies requiring their
supply chains to introduce BCPs. Japanese companies are also required by overseas business
partners to prepare a BCP, particularly in export-oriented industries such as automobiles andelectric machinery.
(ii) Awareness of operating loss
The loss of commercial and industrial stocks
caused by the Great Hanshin-Awaji Earthquake
amounted to ¥2.54 trillion, an amount that was
surpassed by the operating loss of ¥2.6 trillion interms of reduced production, difficulty in procuring raw materials and lost opportunities resulting from the disruption of logistics (Table
3-1). Much of the loss might have been prevented if businesses had prepared a BCP. After
this bitter experience, companies have come torecognize that business continuity is of paramount importance in terms of maintaining andimproving corporate value.
Table 3-1. Losses from Great Hanshin-Awaji
Earthquake
Stock losses
Buildings
Plant & equipment
Raw materials & products
Total¥1,420 billion¥560 billion¥560 billion¥2,540 billion
Flow losses

Commercial
Commercial/industrial
Total

Source:¥1,660 billion¥940 billion¥2,600 billion

Nihon Keizai Shimbun, 28 June 1995.

The recent Niigata-Chuetsu Earthquake inflicted
severe damage on auto and electric machineryparts manufacturers. Companies which use an
efficient production system to minimize stock,
including the just-in-time method, are likely toexperience a shutdown if supplies from parts
manufacturers are cut off. Indeed, Nihon Seiki,
the top manufacturer of motorcycle instruments,
stopped supplying products as its plant suffereddamage from the earthquake, thus affecting the
production of motorcycle manufacturers such as
Yamaha Motor and Kawasaki Heavy Industries.
Niigata Sanyo Electronics, a subsidiary of Sanyo
Electric and major supplier of semiconductors
for audio-visual applications, suffered a hugeestimated loss of ¥37 billion due to the shutdown,in addition to direct losses of ¥18.4 billion, an
inventory loss of ¥4.6 billion and a recovery costof ¥27 billion.19(iii) Viewpoint of corporate social responsibility(CSR)
It is crucial to consider what measures should betaken to satisfy stakeholders when facing risks.
So far, companies have focused on how to protect their own managerial resources in crisis
situations. From now on, companies that incorporate stakeholder considerations in their BCP
will receive higher evaluation from the viewpointof CSR.

19

Nihon Keizai Shimbun, 22 December.

Development Bank of Japan Research Report/ No. 54

25

IV Issues and Outlook ofCorporate Value Improvement
through Disaster Management
1.

Approach to Corporate Efforts for
Disaster Reduction

This section outlines techniques for evaluating
corporate efforts for disaster reduction. In addition to these techniques, the Cabinet office hasannounced that it will develop a separate indicator of corporate disaster preparedness.
1.1. Evaluation Technique Addressing Risks
as a Whole
Crisis Management Regime Diagnosis System
of Tokio Marine & Nichido Risk Consulting
The system diagnoses corporate crisis management regimes by quantifying the answers given toa series of questions related to the following ninesubjects: top management; organization (e.g.
group in charge of crisis management); crisis
management process (risk analysis/evaluation,measures against risks, preparation of a crisis
management program); the implementation,
evaluation and correction of a crisis management
program; the development of organizational capacity/human resources; information processing incrisis situations; management records (crisis
management documents, activity records); emergency regime and planning (response, public information, media relations); and recovery planning (plan for returning to normal operation).
1.2. Indicators Emphasizing Earthquake
Factors(i) FEMA (Federal Emergency Management
Agency) indicator
The FEMA was established in 1979 by integrating the emergency management functions that
had previously been dispersed among multiple
departments and agencies. The Agency deals
with a wide range of risks from natural disasters
to armed conflicts. As regards earthquakes, four
guidelines have been presented for businesses,
counties, cities and metropolitan areas, respectively. The FEMA indicator typically identifies
the responsibility of each sector, providing a basis for many evaluation techniques for disaster
26

Development Bank of Japan Research Report/ No. 54

management in Japan.
Outline of integrated earthquake preparedness guideline for businesses
Part 1 User guide
A. Introduction
B. Cooperation with local governments inplanning
C. Essential elements of corporate earthquake planning
D. Objectives
E. Premises for planning
F. Planning procedure
Part 2 Planning guide
A. Planning components
B. Burden sharing
C. Emergency response
D. Business recovery
E. Earthquake preparedness
Part 3 References
Sources: Sumitomo Marine Risk Research Institute, Federal Emergency Management Agency, JapaneseStandard Association, 1995; Research Reportfor the Improvement of Corporate Disaster Preparedness in the Gakunan Area.

(ii) BAREPP (Bay Area Earthquake Preparedness Project) corporate disaster preparedness checklist
The checklist is composed as follows.
1) Disaster prevention and mitigation
Buildings, indoor contents, education andawareness-raising, business continuity, data
management/backup, management of hazardous materials, quake-resistant computerequipment.
2) Occurrence of an earthquake
Damage inspection, liaison with administrative organizations, backup power, evacuation,risk assessment of damaged buildings, emergency relief, housing/food/medical care in
emergency situations, public information.
3) Rapid restoration
Inspection of damage to facilities, preparation
for rubble disposal, recovery of facilities,
preparation for emergency measures including the construction of shelters, ensuring the
supply of necessary goods and materials, arrangements with the mass media (public in-Fujinomiya, the Town of Shibakawa, and relatedchambers and associations of commerce and industry, all located in the potential disaster area of
a Tokai Earthquake, worked together to establish
the Study Group for the Improvement of Corporate Disaster Preparedness in the Gakunan Area,
in order to promote preparedness for the Tokaiand other earthquakes. Based on the results of aquestionnaire survey by the Study Group, a
Check Sheet for the Improvement of Corporate
Disaster Preparedness against a Tokai Earthquake was developed for use by business establishments including SMEs, to enable them tocheck their own disaster preparedness. Two setsof check sheet have been prepared, one for comprehensive measures and another for individual
measures. The check sheet for individual measures comprises the sections dealing with damage
mitigation, preparedness for emergency response,
preparedness for business continuity and recovery, contribution to disaster prevention in thecommunity and universal design for disaster reduction. Each section consists of several items,
to be evaluated on a scale of 0 to 3. The averagescore is calculated for each section to draw abalance chart, which is used to identify the levelof achievement. Progress may be monitored byperiodic evaluation.

formation), planning for restoring functions,coordination with the local community, planning for loans and investment, cooperation
with banks where accounts are held, liaison
with local authorities.
Specific questions include:
1) Disaster prevention and mitigation• Have you identified the construction
method, risks and vulnerable spots of thebuildings that constitute your workplace?
2) Occurrence of an earthquake• Have you made plans for preliminary estimation of damages and identification ofdangerous situations?
3) Rapid restoration• Have you made plans to conduct a comprehensive investigation of the damage tofacilities to determine whether the operation should be relocated temporarily or
continued at the same site?
Sources: Morio Ino, “Earthquake Preparedness of U.S.
Companies,” Earthquake Journal No. 13, Association for the Development of Earthquake Prediction, 1994; Research Report for the Improvement of Corporate Disaster Preparedness in the
Gakunan Area.

(iii) Research Report and Check Sheet for the
Improvement of Corporate Disaster Preparedness in the Gakunan Area
Fuji Tokoha University, Fuji Prefectural Administration Center, the City of Fuji, the City of

Table 4-1. Check Sheet for Improvement of Corporate Disaster Preparedness against
a Tokai Earthquake
Individual measures
Section

II-1

II-2

II-3

Preparedness forbusiness
continuity
and recovery

Contribution
to disasterprevention
in the community

Universal
design fordisasterreduction

8

6

5

5

47

5

11

6

5

6

49

x

x

x

x

x

ii-1

ii-2

ii-3

Damagemitigation

Preparedness for
emergency
response

16

7

16
x

Comprehensive measures

Aggregate
total

Score (A)No. of items (B)Upper line: manufacturing
Lower line: commerce
Average (C) = A/B

Development Bank of Japan Research Report/ No. 54

27

Comprehensive measures
3
2

Universal design fordisaster reduction

Damage mitigation
1
0

Contribution to disasterprevention in the community

Preparedness for
emergency response

Preparedness for business
continuity and recovery

Source:Study Group on the Improvement of Corporate Disaster Preparedness
in the Gakunan Area, “Disaster Preparedness of Your Company.”

Figure 4-1. Balance Chart for Disaster Resilience Improvement
Disaster reduction capacity

Capital stock (C)Manpower (M)Planning capacity (P)Quakeproof capital stock (C1)

Disaster preparedness training (M1)

Rapid reaction (P1)

Fireproof capital stock (C2)

Disaster preparedness education (M2)

Planning contents (P2)Information capacity (C3)In-house fire-fighting team (M3)Information system (P3)

Supply preparation (C4)Management awareness (M4)

Preparedness (P4)

Source:Prevention Times, No. 219, 2004.

Figure 4-2. Composition of Disaster Reduction Capacity Measures in CMP Method(iv) CMP method20
This method, proposed by Professor Hideki Kajiof Keio University and Takayuki Yamamoto of
Koito Manufacturing, evaluates corporate disaster preparedness in terms of capital stock, manpower and planning capacity based on the dataobtained from a survey covering 110 companies
operating in Fujisawa, Kanagawa Prefecture(Figure 4-2).
The CMP method calculates four indicatorsfor capital stock (quakeproof capital stock, fireproof capital stock, information capacity, supply
preparation), four indicators for manpower (disas20

CMP stands for capital stock, manpower and planning
capacity.
28

Development Bank of Japan Research Report/ No. 54

ter preparedness training, disaster preparedness
education, in-house fire-fighting team, management awareness) and four indicators for planning
capacity (rapid reaction, planning contents, information system, preparedness). Building on lessons
learned from the Great Hanshin-Awaji Earthquake,the method not only considers the existence ofcorporate disaster reduction plans, but also evaluates the contents of such plans. In addition, it
takes into account the adequacy of communication
systems involving external entities including
business partners. The method also calculates theweight of each indicator through principal component analysis to produce three composite indicators: overall disaster preparedness, structural

Table 4-2. Number of Questions and Weight for Each Indicator
Prefectures
Basic nine categories

Wards and cities

No. ofquestions

WeightNo. ofquestions

Weight(i)

Risk identification/assessment, damage
assumption

99

77

86

68

(ii)

Damage mitigation/prevention

69

46

73

47

(iii) Organization

160

133

165

136

(iv) Communication

78

66

78

66

(v)

28

28

29

29

(vi) Activity planning

202

165

246

203

(vii) Information sharing with communities

36

24

36

24

(viii) Education/training

82

76

90

84

(ix) Evaluation/review

18

18

18

18

Total

772

633

821

675

Maintenance/management of supplies and stocks

Source:Fire and Disaster Management Agency, Ministry of Internal Affairs and Communications, “Result of
Self-evaluation on Prefectural Disaster Preparedness and Crisis Management Capacity.”

capacity vs. non-structural capacity, and routine
capacity vs. contingency capacity.
Most of the techniques to evaluate corporate
disaster preparedness simply add up points
scored on each item in a checklist or questionnaire, whereas the CMP method assigns different
weights to individual indicators.
1.3. Techniques Regarding Local Disaster
Reduction Capacity(i) Fire and Disaster Management Agency“Guideline for the Evaluation of Disaster
Preparedness and Crisis Management Capacity of Local Governments”
OutlineThis Guideline was designed for impartial
evaluation of disaster reduction and crisis management systems to enhance the disaster preparedness and crisis management capacity of local
governments. Modeled primarily on the FEMA
indicator, the Guideline enables evaluation andanalysis by providing a questionnaire checklist
on disaster reduction to be answered by local
government and presenting the results as a multidimensional chart.
The Guideline covers all prefectures as wellas municipalities with large populations. Questions encompass various disasters including
earthquakes, floods, windstorms, volcanic erup-

tions, hazardous materials, nuclear power andterrorism.
Evaluation headings
Evaluation is made on nine indicators concerning
risk identification and assessment (one indicator),damage mitigation and prevention, organizationand planning (seven indicators) and evaluation
and review (one indicator).
Taking account of specific local conditions,evaluation can be made by disaster, by stage(minimum measures to be taken regardless of thecharacteristics of local communities and risks
involved, measures to be taken in high-risk areas,measures to ensure more effective and sophisticated disaster reduction), or by objective(life-saving, prevention of severe disruption to
livelihood, disaster damage control).
Weights
The nine indicators are weighted as follows. In
presenting the values of individual indicators in achart, they are converted into percentage points
as the indicators have different numbers of questions and weights.
The table below shows the results of evaluations made by the prefectural governments. The
prefectures in Group A, located in the enhanced
Tokai earthquake preparedness region, receive ahigher rating than the other groups, as necessary
measures have been taken in the 25 years since
Development Bank of Japan Research Report/ No. 54

29

Table 4-3. Result of Local Government Evaluations
The 47 prefectures are classified into the following three groups. The table compares the averages of the three groups foreach of the nine indicators and for the overall score.
Group A: Eight prefectures designated as enhanced Tokai earthquake preparedness region:
Tokyo, Kanagawa, Shizuoka, Yamanashi, Nagano, Gifu, Aichi and Mie
Group B : 15 of the 21 prefectures designated as enhanced Tonankai/Nankai earthquake preparedness region, excluding the 6 prefectures that are also included in the enhanced Tokai earthquake preparedness area:
Shiga, Kyoto, Osaka, Hyogo, Nara, Wakayama, Okayama, Hiroshima, Yamaguchi, Tokushima, Kagawa,
Aichi, Kochi, Oita, MiyazakiGroup C : Other 24 prefectures not included in any enhanced earthquake preparedness region.

Overall evaluation(i)
Risk identification/damage assumption(ii)
Damage mitigation/prevention(iii) Organization(iv) Communication(v)
Maintenance/management of supplies and stocks(vi) Activity planning(vii) Information sharing with communities(viii) Education/training(ix) Evaluation/review
Source:

B
41.1
27.7
34.4
52.4
67.5
46.6
55.4
29.9
33.6
22.5

C
42.6
27.1
38.4
52.0
67.9
50.5
62.1
28.0
34.8
22.2

National average
43.5
30.0
40.0
53.6
68.5
50.2
59.6
31.0
35.0
23.9

Fire and Disaster Management Agency, Ministry of Internal Affairs and Communications, “Result of
Self-evaluation on Prefectural Disaster Preparedness and Crisis Management Capacity.”

the promulgation of the Law on Special Measures against Large-scale Earthquakes. In contrast,
the prefectures in the enhanced Tonankai/Nankai
earthquake preparedness region have an evenlower rating as a whole than the other prefecturesclassified in Group C, mainly because the region
was only designated in 2001. Nonetheless, theresult for Group A indicates that the designation
as an enhanced earthquake preparedness regionis accelerating the adoption of disaster reduction
measures.
(ii) Shizuoka Prefecture “Survey on Municipal
Disaster Preparedness”
Local disaster preparedness is determined byexamining the measures to be undertaken by themunicipalities according to their community disaster preparedness plans. Answers to the 125
questions on a scale of 1 to 4 are quantified to
produce the overall score. The level of achieve-

30

A
51.1
43.1
55.3
60.7
72.2
56.3
59.9
42.1
38.4
31.6

Development Bank of Japan Research Report/ No. 54

ment is measured against the case of 100% implementation of all necessary measures.
(iii) Cabinet Office “Survey on the Establishment of Techniques for Evaluating Community Disaster Preparedness”
The survey identifies the disaster preparedness of
local residents and communities. Community
preparedness against landslide disasters is classified into six categories (early warning and monitoring capacity; capacity to decide on voluntaryevacuation; communication capacity; escapeguiding capacity; organization for disaster reduction; and landslide risk detection). Different
weights are assigned to individual questions. The
level of achievement is measured against perfectdisaster preparedness (= 100).
The disaster preparedness indicators mentioned above may be summarized as shown in
Table 4-4.

Table 4-4. Comparison of Disaster Preparedness Indicators
Evaluation indicator

Covered risks

Evaluated
entities

Tokio Marine & Nichido
Risk Consulting“Crisis Management Regime Diagnosis System”

OverallBusinesses

FEMA (Federal Emergency Management
Agency) Guideline

Emphasis onearthquakes

Local governments andbusinesses

Emphasis onearthquakes

Businesses

Emphasis onearthquakes

Businesses(establishments)

BAREPP (Bay Area
Earthquake Preparedness
Project) guideline
Study Group on the Improvement of Corporate
Disaster Preparedness in
the Gakunan Area
“Check Sheet for the Improvement of Corporate
Disaster Preparedness in
the Gakunan Area”

Prof. Kaji (Keio Univ.)and Mr. Yamamoto (Koito
Manufacturing)“CMP method”

Emphasis onearthquakes

Businesses

Fire and Disaster Management Agency “Guideline for the Evaluation ofDisaster Preparedness andCrisis Management Capacity of Local Governments”

Disaster risk

Prefectures
Municipalities

Shizuoka Prefecture“Survey on Municipal
Disaster Preparedness”

Disaster risk

Municipalities

Cabinet Office“Survey on the Establishment of Techniques for
Evaluating Community
Disaster Preparedness”

Landslidedisasters

Communities

Sources:

Evaluation items
Evaluation is made on the following nine items toidentify strengths and weaknesses of crisis management regime: (i) top management, (ii) organization,(iii) crisis management process, (iv) implementation,
evaluation and correction of crisis management program, (v) development of organizational capacity/human resources, (vi) information processing incrisis situations, (vii) management records, (viii)
emergency regime and planning, and (ix) recovery
planning
Checklist method:(i) planning components, (ii) burden sharing, (iii)emergency response, (iv) business recovery, and (v)earthquake preparedness
Checklist method:(i) disaster prevention and mitigation, (ii) occurrence ofa disaster, and (iii) rapid restoration
Evaluation on a scale of 0-3 on the following items: (i)comprehensive measures, (ii) damage mitigation
measures, (iii) preparedness for emergency response,(iv) preparedness for business continuity and recovery,(v) contribution to disaster prevention in the community, and (vi) universal design for disaster reduction
Evaluation based on the following 12 indicators as wellas the composite “overall disaster preparedness indicator.”
Stock capacity:(i) quakeproof stock capacity, (ii) fireproof stock capacity, (iii) information capacity, and (iv) supply
preparation
Manpower:(i) disaster preparedness training, (ii) disaster preparedness education, (iii) in-house fire-fighting team, and(iv) management awareness
Planning capacity:(i) rapid reaction, (ii) planning contents, (iii) information system, and (iv) preparedness
Evaluation on total scores obtained in answering questions concerning: (i) risk identification/assessment,
damage assumption, (ii) damage mitigation/prevention,(iii) organization, (iv) communication, (v) maintenanceand management of supplies and stocks, (vi) activity
planning, (vii) information sharing with communities,(viii) education/training, and (ix) evaluation/review
Answers to questions regarding the following issues ona scale of 1 to 4 are quantified to evaluate disaster
preparedness: (i) disaster countermeasures office, (ii)information/communication activities, (iii) emergency
transport activities, (iv) voluntary disaster prevention
activities, (v) evacuation activities, (vi) medical relief
activities, (vii) emergency supplies, and (viii) emergency relief activities
Evaluation based on the level of achievement against
perfect disaster preparedness (= 100), with different
weights assigned to individual questions regarding: (i)early warning/monitoring, (ii) capacity to decide on
voluntary evacuation, (iii) communication capacity,(iv) escape guiding capacity, (v) organization for disaster reduction, and (vi) landslide risk detection.

No. ofquestions

60

−

−

Manufacturing
47
Commerce
49

34

Prefectures
772
Municipalities
821

125

29

Fire and Disaster Management Agency, Cabinet Office, “Survey Report on the Establishment of Guideline for
the Evaluation of Prefectural Disaster Preparedness and Crisis Management Capacity;” Research Report for the
Improvement of Corporate Disaster Preparedness in the Gakunan Area.

Development Bank of Japan Research Report/ No. 54

31

2.

Ideas on Disaster Rating

Comprehensive corporate efforts for disaster reduction (disaster management) including BCPs
must be evaluated properly in order to encourage
further efforts. In addition to developing comprehensive indicators, disaster rating may also beensured by incorporating disaster-related factors
into the indicators used for environmental or
CSR ratings.
Taking into account the evaluation techniques outlined in the previous section, this section outlines some ideas regarding the introduction of a disaster rating system in the future.
2.1. Forming a Social Consensus
Environmental measures are likely to be acceptedwithin a company, as they will help reduce costs
through energy conservation and avoid legal risk
by complying with environmental quality standards. Although disaster reduction efforts are crucial for saving the lives of employees, measuresthat incur costs to cover a highly uncertain risk
will not be popular. Introduction of disaster rating
will be difficult without a social consensus that
supports corporate efforts for disaster reduction
and their evaluation.
2.2. Divergence between Indicators and Actual Conditions
Priorities in disaster reduction vary among industries and with size of corporation. Of course,saving the lives of employees and customers
should be the top priority, but the second andthird priorities should be determined by individual companies. If evaluation techniques are too
uniform, they may not be able to reflect the actual conditions of disaster reduction efforts inindividual companies. Likewise, the level of adisaster preparedness plan cannot be identified
by simply asking whether such a plan exists.
Thus, disaster indicators must reflect the actual
status of corporate efforts.
2.3. Evaluation of Active Disaster Reduction
Efforts
Indicators to evaluate disaster reduction efforts
need to combine negative screening for minimum measures with positive screening for active

32

Development Bank of Japan Research Report/ No. 54

corporate efforts including community disaster
reduction agreements. A credit association in
Fuji has installed a plug outlet connected to a
private power generator outside the office, which
can be used in case of emergency. If such active
investment is positively evaluated, it will encourage corporate efforts for disaster reduction.
2.4. Consistency of Different Indicators
Appropriate weights should be assigned to different aspects of corporate efforts, such as lifesaving and profit protection. It is crucial to ensure that the weighting of individual items is
consistent with the overall evaluation of corporate efforts.
3.

Disaster Rating Indicator

3.1. Framework of Evaluation Measures
In light of the ideas outlined in the previous section,
an evaluation measure may be developed to see
whether a PDCA cycle is functioning at each of thechronological stages: prevention, emergency andrecovery (Table 4-5). Some components of this indicator are common to all stages, including compliance and cooperation with the local community, development of products and services for disaster reduction, and disclosure of disaster information. The
indicator makes it possible not only to evaluate corporate disaster reduction efforts (disaster management) in a holistic manner but also to monitor progress at each chronological stage. The questionnaire
will contain qualitative questions asking whether
certain efforts are being made, as well as quantitative
ones asking about the ratio of quake-resistant buildings, the objective regarding recovery time and thelevel of achievement against identified goals.
3.2. Major Considerations in the Indicator
The disaster rating indicator includes the following considerations:(i) Confirmation of top management’s commitment;(ii) Issues related to computerization and cooperation with the local community, whose
importance was reconfirmed by Japan’s experience in major disasters in the past, including the Great Hanshin-Awaji Earthquake;Table 4-5. Disaster Rating Indicator
Preventive measures (disaster mitigation): minimize damages

Emergency measures (crisis management): evacuation, safety confirmation and life-saving

Example of components

Example of components

Example of components

PolicyDo you have a company-wide policy
for disaster reduction?

PolicyDo you have a clear policy foraction in case of a disaster?

PolicyObjective

Do you have clear objectives fordisaster reduction?

Objective

Do you have clear objectives forevacuation, safety confirmationand life-saving measures?

Objective

Planning

Do you have a medium- or long-termplan for efficient implementation ofdisaster reduction measures?
Do you have a comprehensive manualfor disaster reduction?

Planning

Planning

Organization

Do you have a section in charge ofdisaster reduction?

Organization

Do you have a concrete plan forevacuation, safety confirmationand life-saving measures?
Do you have a manual setting
forth actions to be taken to ensure
evacuation?
Have you defined in advance thecomposition of a “disaster countermeasures office”?

Management
commitment

Is your top management clearlycommitted to disaster reduction
efforts?
Have you prepared multiple scenarios?

Evacuation

Have you designated a section
responsible for evacuation?

Risk identification

Plan
Manual

Risk assumption

Do

Recovery measures: business continuity and early
restoration

ManualManualOrganization

Disaster reduction
investment

Do you identify the amount of investment in disaster reduction for eachbusiness year (disaster accounting)?

Medical relief

Have you prepared a list of
hospitals nearby?

Damageidentification

Promotion of
quake resistanceDo you have any concrete measures
for improving quake resistance?

SafetyDo your employees know how to
confirm safety?

Promotion of fire
resistanceDo you have any concrete measures
for improving fire resistance?

Preparation ofdisaster reduction supplies

Are disaster reduction supplies
properly distributed?

Installation ofsubstituteequipment
Supply chains
Risk financing

Check

Audit

Do you have your disaster reduction
measures evaluated by an independent
third party?

Audit

Education

Do you provide all employees witheducation on basic matters regarding
disasters (earthquake damages, recent
disasters, etc.)?
Have you ensured that all of yourbusiness establishments are resistant toearthquakes of up to 7 on the Japaneseintensity scale? Rating according to
the level of quake resistance (1/2 if
more than half of the establishments
are quake resistant).
Are all of your business establishments fire resistant (1/2 if more thanhalf of the establishments are fire
resistant)?
Are evaluations by a third party
properly reflected in your plans or
manuals?

Training

Progress in quake
resistance improvement

Progress in fire
resistance
Review
ActionCommoncomponents

Do you have a clear policy forbusiness continuity or rapid recovery?
Do you have clear objectives forbusiness continuity and recovery(e.g. number of days required forrecovery)?
Have you prepared a BCP (business
continuity plan)?
Have you set forth in a manual theprocedures to ensure business
continuity and recovery?
Have you established across-divisional committee on
business continuity?

Have you made an assumption on
the chronological development ofearthquake damages and response
measures (scenario assumption)?
Do you have any concrete measures
for identifying casualties andproperty damages affecting business
continuity after a disaster?
Have you secured an appropriate
backup office or substitute production facilities?
Do you consider business continuityof prospective partners before
entering into transactions?
Have you secured risk financing
through earthquake insurance, CAT
bonds or loan commitments, forexample?
Do you have your business continuity management evaluated by anindependent third party?

Do your evacuation drills involve
administrative organizations
including fire department or otherexperts?
Do you conduct an evacuation
drill at least twice a year (1/2 if it
is conducted only once a year)?

Audit

Training

Do you conduct any simulation toensure smooth business continuity inemergency situations?

Education

Do you hold lectures to learn
basic facts about evacuation,
safety confirmation and relief?

Education

Do you hold training sessions on
business continuity?

Review

Do you review evacuation routes,
disaster reduction supplies andmanuals from time to time tocorrect any inadequacy?

Review

Are evaluations by a third party
properly reflected in your plans or
manuals?

ComplianceHave you committed any serious violations of law in the last three years?

Community

Have you concluded any support agreement with national or local governments to open up your facilities toevacuees or to provide food, water or other necessary supplies?

Disaster reduction products

Have the sales of products or services for disaster reduction increased on the previous year?

Disclosure

Have you properly disclosed information on disaster reduction measures taken in your company?

Component

Score

Preventive measures (disaster mitigation)
Emergency measures (crisis management)
Recovery measures
Common components
Total

Source: DBJ.

Development Bank of Japan Research Report/ No. 54

33

(iii) Evaluation from the viewpoint of business
continuity, an emerging requirement forcompanies; and(iv) Confirmation that commitment to disaster
reduction is not a mere formality, but supported by the consideration of multiple scenarios, for example.

4.

New Methods of Business Evaluation

Intangible assets now account for almost 40% of
the total market value of Japanese companies.21
In addition to intellectual property in a narrow
sense, including patents, intangible assets have awide variety of components such as human capital, organizational capital including the manage-

Table 4-6. Reports and Accounting for Business Evaluation
Disclosure
methodSustainability
report

CSR reportIntellectual property report

Financial reportSocial environmental reportIntellectual capital
reportAccounting

Environmental
accounting

CSR accountingIntellectual property accounting

Financial accounting

Disaster accountingIntellectual capital(accounting)

Improve CSR byclarifying how theeconomic benefitsof corporate activities are distributed
among stakeholders.

Facilitate dialogue
between markets
and companies
involved in intellectual property
management.

Quantify the costand effect of various corporate
activities to contribute to society.
Include social
contribution such as
welfare activities
and compliance.

10 components
including:(i) core technology
and businessmodel;(ii) orientation of
R&D segment
business strategy;(iii) outline of R&D
segment and intellectual property;
and(iv) analysis on themarketability andmarket advantageof technology.

Maximize returns
through businessrisk management,
based on the understanding that risk
management represents a comprehensive activity tocreate businessvalue.
Disclose majorrisks in financial
report.

Improve corporate
image by highlighting CSR efforts.
Also used as a
strategy to ensurestable growth.

Drive home thegrowth potential of
the company fromthe viewpoint ofintellectual property.

CSR report adopted
by dozens of Japanese companies.
CSR accounting
introduced by
Ito-Yokado, Mitsui
Sumitomo Insurance, etc.

Adopted by 13
companies participating in the METI
study group (Tokyo
Electron, Asahi
Kasei, NEC, etc.).

Objective

Contents

Strategic
aspectCurrent
statusPromote environmental communication, ensure accountability forenvironmental
conservation efforts
in business activities and provide
stakeholders with
useful information.
Overview of policies, objectives andachievements
related to environmental considerations in businessactivities; current
conditions of environmental management; current
status of environmental impact ofbusiness activities
and efforts for its
reduction; current
status of social
measures.
Awareness-raisingof management andemployees; functions to promoteaction; advertisingof corporate attitude toward environmental conservation.
Adopted by 34% oflisted Japanesecompanies.

Improve corporate
disaster preparedness by clearlypresenting efforts
for disaster reduction and theireffect.

Explain and develop the sources
and management ofcorporate intellectual capital.

Compare investment in disaster
reduction (quake
resistance improvement, BCP,
cost of disaster
preparedness training) with the effectof loss mitigation
through disaster
reduction measures.

How to accumulate
and develop existing intellectual
capital in employees, customers,
technologies,
processes, and therelations among
them.

Improve corporate
value by appropriate risk management and internal
control.

Improve corporate
value by highlighting the company’sefforts for disaster
reduction.

Improve corporate
value by recognizing intellectual
capital as thesource of corporate
value.

Disclosure ofenterprise and otherrisks is required infinancial reports
published on 1
April 2003 or later.

Several companies
including Sekisui
Chemical describe
disaster reduction
efforts.

Codified in Denmark.
Codification underconsideration in
U.K. and Finland.

Sources: Environmental Accounting Guidelines; White Paper on International Economy and Trade 2004; METI Reference
Guideline for Intellectual Property Information Disclosure.

21

34

Development Bank of Japan Research Report/ No. 54

White Paper on International Economy and Trade 2004.

ment of organizations, and the network of business partners. Proper disclosure of the company
value that is not presented on the balance sheet
will be important for the company itself, as well
as for a wide range of stakeholders. For this reason, corporate management and its evaluation,
which relied primarily on financial indicators,
have been approached in recent years from various viewpoints including CSR, risk management
and intellectual capital (Table 4-6). This section
describes some of the emerging methods ofbusiness evaluation.
4.1. Environmental Accounting
The objective of environmental accounting is toachieve sustainable development, maintain a favorable relationship with the community, andpursue effective and efficient environmental
conservation activities. These accounting proce-dures allow a company to identify the cost ofenvironmental conservation during the normal
course of business, identify benefit gained fromsuch activities, provide the best possible meansof quantitative measurement (in monetary valueor physical units) and support the communicationof its results (Environmental Accounting Guidelines 2002). Environmental accounting is composed of environmental conservation cost(monetary value), environmental conservation
benefits (physical units), and the economic benefit associated with environmental conservation
activities (monetary value).
An increasing number of companies use
environmental accounting to prepare and publish
an environmental report (Figure 4-4). 34% oflisted companies prepared such a report in fiscal
2002.

Environmental
accounting
Environmental
conservation cost
Financialperformance

Source:Environmental
conservation benefits

Economic benefit
associated withenvironmental
conservation
activities

Environmental
performance

Environmental Accounting Guidelines.

Figure 4-3. Outline of Environmental Accounting

800
700

Number of companies preparing anenvironmental report600

Share in total (%)

25.0

21.9
20.0

20.0

16.0

500

15.0

400
300

9.8
6.5

7.4

579

743

10.0

430

200
100

650

169

197

1997

1998

5.0

270

0

0.0
1999

2000

2001

2002

2003

Sources: Ministry of the Environment, “Survey on Environmentally Sound Corporate Behavior FY2002,” etc.

Figure 4-4. Number of Companies Preparing an Environmental Report
Development Bank of Japan Research Report/ No. 54

35

4.2. CSR Accounting
CSR accounting quantifies the costs and effects
associated with various social contribution activities undertaken by companies. It covers ethical/compliance and environmental conservation
activities, as well as social contribution activities
including donations. Their effects include bothinternal effects that bring direct benefits to thecompany and external effects that benefit society
as a whole. CSR accounting has been publishedby companies such as Mitsui Sumitomo Insurance and Ito-Yokado.
4.3. Disclosure of Risk Information
The fiscal 2003 revision to the Securities Exchange Law expanded the scope of disclosure.
Thus, enhanced disclosure is now required onmatters related to corporate governance, analysis

of financial/managerial performance by management, and matters associated with risks.
Many companies include earthquake and otherdisaster risks in their risk information disclosure(Table 4-7). The description of risk by Tomoegawa Paper is shown below as an example.
Starting in the current fiscal year, companies are
required to take measures against the disclosed
risks. Preparation of BCP or risk financing is one
possible response to the disclosed risks.
4.4. Intellectual Capital
Various approaches to intellectual capital havebeen developed by companies and researchers
since Scandia (Sweden) introduced an intellectual capital report. Preparation of intellectual
capital reports has been encouraged at the national level in recent years, particularly in Nordic

Table 4-7. Disclosure of Business-related Risks
Risk heading
Foreign exchange and interest risks
Disaster risk
Impact of economic fluctuations
Risks involved in expanding business abroad
Fluctuations in raw material prices
Legal risk

Number of disclosing companies
54
40
40
38
32
31

…

…
Information system

24

Total number of companies covered by the analysis

68

Source: Sompo Japan Risk Management, “Major Disasters and Business Continuity Management.”

Tomoegawa Paper Co., Ltd.
Impact of Tokai earthquake
Production facilities of our group are located in the City of Shizuoka, Shizuoka Prefecture. Depending on its
scale, a Tokai earthquake might have a serious impact on production and sales activities for a substantial period of time. In light of this risk, the Company has taken the following countermeasures.
(1) We asked relevant experts to measure the quake resistance of production facilities and equipment. Basedon the results, we have completed necessary works to reinforce the buildings against earthquakes.
(2) We have production facilities in Ibaraki Prefecture (electronic material business) and North America(chemical and foreign paper businesses) to diversify risks.
(3) We have ensured risk financing primarily through earthquake insurance.
Source: Tomoegawa Paper financial report.

36

Development Bank of Japan Research Report/ No. 54

countries including Denmark and Finland.22 The
sources of corporate value may be classified into
the upstream area including human and organizational resources, the midstream area including
management, and the downstream area that produces ultimate benefits. Most of the descriptions
in financial reports only refer to the downstream
area, i.e. final results. In the future, explanations
will need to cover the upstream and midstream
areas, which are highlighted by intellectual capital reports. As corporate value cannot be explained by financial indicators alone, intellectual
capital reporting is expected to assume a newrole in expressing corporate value appropriately.
Looking ahead, the various approaches tobusiness evaluation outlined in this section, including intellectual capital accounting, will not
only become more sophisticated but also interact
with each other.
5.

Development of SRI for Disaster
Reduction

As discussion heats up on corporate social responsibility, the significance of efforts for disaster reduction needs to be clearly understood in
conjunction with the triple bottom-lines of theeconomy, environment and society.

Estimated amount of outstanding SRI
worldwide (2001)

Socially responsible investment (SRI) seeks
to meet this requirement of corporate social responsibility by incorporating social and environmental factors in the assessment of investment content, in addition to the traditional financial factors. As shown in Figure 4-5, SRI has
developed rapidly since the late 1990s, when
Anglo-American pension funds and insurers began to embrace socially responsible investment
behavior.
Starting in the field of the environment, SRI
in Japan has expanded to social areas (Table 4-8).
Although it remains far below the level ofEurope and the U.S. in terms of scale, Japanese
SRI is expected to increase in the years ahead asinterest in corporate social responsibility grows.
In this context, introduction of SRI for disaster
reduction will have to be considered, in order toassess corporate management in terms of disaster
resilience, as well as environmental soundness
and social efforts. Various forms of SRI will be
developed in the future. Most importantly, however, Japanese companies will be able to erase
their concerns about the future risks of earthquakes and other natural disasters by advocating
the adoption of disaster reduction SRI as a global
standard.

Scale of SRI in U.S.
($ billion )
2500

U.S.
U.K.

2,332.0

326.6

Canada31.4

Europe

17.6

1500
1000

1.9

Japan

2000

500

1.1

Australia
0

500

1000

1500

2000

2500

0

1984

1995

1997

1999

2001

($ billion)

Sources: Social Investment Forum, etc.

Figure 4-5. Scale of SRI Market
22

Denmark has codified the disclosure of intellectual capital in a report.
Development Bank of Japan Research Report/ No. 54

37

Table 4-8. List of SRI Funds in JapanClassification

Date ofcreation

Nikko Eco-Fund

Domestic

20/8/1999

Environment

37,077

Eco-Fund “Buna no Mori”

Domestic

30/9/1999

Environment

12,629Kogin-Daiichi Life Asset Management

Eco-FundDomestic

29/10/1999

Environment

5,046

UBS Global Asset Management

UBS Japanese Stock
Eco-Fund (Eco Hakase)

Domestic

29/10/1999

Environment

3,924

UFJ Partners Investment Trust

Eco Partners(Midori no Tsubasa)

Domestic

28/1/2000

Environment

2,596

Asahi Life Asset Management

SRI Social Contribution
Fund (Asu no Hane)

Domestic

28/9/2000

Environment, employment,
consumer interest, social
contribution

4,116

Mitsui-Sumitomo Asset Management

Eco Balance (Umi to Sora)

Balance

31/10/2000

Environment(global warming)

1,089

Nikko Asset Management

Global Sustainability Fund
(Nikko Globe A)

International

17/11/2000

Economy, society, environment

1,121

Nikko Asset Management

Global Sustainability Fund
(Nikko Globe B)

International

17/11/2000

Economy, society, environment

701

Daiwa-Sumigin Investment Trust& Investment Management

Global Eco Growth Fund
(Mrs. Green A)

International

15/6/2001

Environment

1,642

Daiwa-Sumigin Investment Trust& Investment Management

Global Eco Growth Fund
(Mrs. Green B)

International

15/6/2001

Environment

2,574

Investment firm

Name

Nikko Asset Management
Sompo Japan Asset Management

Social/environmental screen

Net assets(¥ million)

UBS Global Asset Management

UBS Global 40

International

7/11/2003

Society, environment, economy

6,044

Sumitomo Trust Asset Management

Good Company

Domestic

26/12/2003

Society, environment, economy

21,253

Shinkin Asset Management

Fukoku SRI Fund

Domestic

27/4/2004

Finance, environment, society, ethics

2,857

Daiwa Asset Management

Daiwa SRI Fund

Domestic

20/5/2004

Ethics, compliance

27,564

Nomura Asset Management

Nomura Global SRI 100

International

28/5/2004

Society, environment, economy

4,739

Nomura Asset Management

Morningstar SRI Index Open

Domestic

39/7/2004

Society, environment, economy

3,426

Mitsubishi Asset Management

Mitsubishi SRI Fund

Domestic

3/12/2004

Employment (family-friendliness)

1,537
139,935

Note:
Source:Net asset figures are as at the end of January 2005.
Daiwa Institute of Research.

Corporate efforts

EconomySRI

Disasterreduction
Environment(Socially Responsible Investment)

Society

Corporate value
improvement
Source: DBJ.

Figure 4-6. Development of SRI for Disaster Management

38

Development Bank of Japan Research Report/ No. 54

Conclusion
In January 2005, the tenth anniversary of theGreat Hanshin-Awaji Earthquake was marked by
the United Nations World Conference on Disaster Reduction, which was held in Kobe with theparticipation of 168 delegations and 78 international organizations. The Conference reiterated
the importance of disaster reduction by adoptinga Hyogo Framework for Action, which includes
five “priorities for action” to be addressed in the
coming ten years including the development ofearly warning systems for natural disasters.
An appropriate mix of self-help, mutual aid
and public assistance is essential if we are toprepare for major disasters including earthquakes.
Among the three elements, self-help, particularly

the role of businesses, has become increasingly
important. Corporate disaster preparedness is
expected to improve substantially, boosted bylegal obligations and voluntary efforts by businesses. The development of BCPs and SRI (socially responsible investment) for disaster reduction will be one of the major challenges in encouraging voluntary and strategic corporate efforts.
Active discussion on corporate social responsibility indicates that disaster reduction, as
well as environmental conservation, must be
considered within its framework. Looking ahead,efforts for disaster reduction will become a major
factor in improving corporate value, as they havea substantial impact on corporate management in
the long term.

Development Bank of Japan Research Report/ No. 54

39

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Development Bank of Japan Research Report/ No. 54

41

List of Back Numbers (Including JDB Research Report)
No. 54 Improving Corporate Value through Disaster Management: Prospects of Socially Responsible Investment (SRI) for Disaster Reduction (this issue)
No. 53 Japan's Innovative Capacity and Policies for Commercializing New Technologies: Using Carve-Outs toCreate New Industries, May 2005
No. 52 Intelligent Transport System (ITS): Current State and Future Prospects, May 2005
No. 51 Recent Trends in the Japanese Economy: Pause in Recovery, March 2005
No. 50 Corporate Capital Spending Behavior and Innovation Efforts: Findings of Survey on Capital Spending
Behavior (Conducted in November 2004), March 2005
No. 49 Survey on Planned Capital Spending for Fiscal Years 2004 and 2005 (Conducted in November 2004),
January 2005
No. 48 Recent Trends in the Japanese Economy: Medium-term Outlook of Japanese Industrial Structure, January 2005
No. 47 Survey on Planned Capital Spending for Fiscal Years 2003, 2004 and 2005 (Conducted in June 2004),
September 2004
No. 46 Recent Trends in the Japanese Economy: Impact of Rising International Commodity Prices on Corporate Input/Output Behavior, September 2004
No. 45 How Life Cycle Assessment (LCA) Can Enhance the Fight against Global Warming, August 2004
No. 44 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Japanese Economy with
Special Focus on the Flow of Funds and Finance, March 2004
No. 43 Survey on Planned Capital Spending for Fiscal Years 2002, 2003 and 2004 (Conducted in August 2003),
November 2003
No. 42 Promoting Corporate Measures to Combat Global Warming: An Analysis of Innovative Activities in the
Field, September 2003
No. 41 Prospects and Challenges for End-of-Life Vehicle Recycling, May 2003
No. 40 Survey on Planned Capital Spending for Fiscal Years 2002 and 2003 (Conducted in February 2003),
May 2003
No. 39 China’s Economic Development and the Role of Foreign-Funded Enterprises, May 2003
No. 38 Decline in Productivity in Japan and Disparities Between Firms in the 1990s: An Empirical Approach
Based on Data Envelopment Analysis, April 2003
No. 37 Trends in Socially Responsible Investment: Corporate Social Responsibility in a New Phase, March
2003
No. 36 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Sustainability of the Japanese Economy, February 2003
No. 35 Concerns for the Future and Generational Consumption Behavior, February 2003
No. 34 Prospects and Challenges Surrounding Japan’s Electrical Equipment Industry: General Electrical
Equipment Manufacturers’ Restructuring of Operations and Future Prospects, November 2002
No. 33 Survey on Planned Capital Spending for Fiscal Years 2001, 2002 and 2003 (Conducted in August 2002),
November 2002
No. 32 Behavior Trends of Japanese Banks toward the Corporate Sector and Their Impact on the Economy,
October 2002
No. 31 Microstructure of Investment and Employment Dynamics: Stylized Facts of Factor Adjustment Basedon Listed Company Data, October 2002
No. 30 Recent Trends in the Japanese Economy: Globalization and the Japanese Economy, August 2002
No. 29 Corporate Financing Trends in Recent Years: Fund Shortages and Repayment Burden, August 2002
No. 28 Urban Renewal and Resource Recycling: For the Creation of a Resource Recycling Society, July 2002
No. 27 Labor’s Share and the Adjustment of Wages and Employment, June 2002
No. 26 Survey on Planned Capital Spending for Fiscal Years 2001 and 2002 (Conducted in February 2002),
May 2002
No. 25 Environmental Information Policy and Utilization of Information Technology: Toward a Shift in Environmental Policy Paradigm, March 2002
No. 24 The Changing Structure of Trade in Japan and Its Impact: With the Focus on Trade in Information
Technology (IT) Goods, March 2002
No. 23 Microstructure of persistent ROA decline in the Japanese corporate sector: Inter-company disparities
and investment strategies, March 2002
No. 22 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation and Prospects ofEvolution, February 2002
No. 21 Survey on Planned Capital Spending for Fiscal Years 2000, 2001 and 2002, December 2001
No. 20 Current Situation and Challenges for Cable Television in the Broadband Era, October 2001
No. 19 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation, August 2001
No. 18 Introduction of a Home Appliance Recycling System: Effects & Prospects: Progress towards Utilisationof Recycling Infrastructure, June 2001
No. 17 Survey on Planned Capital Spending for Fiscal Years 2000 and 2001, June 2001
No. 16 Revitalization of Middle-aged and Elderly Workers in Japan’s Labor Markets: Requiring the Expansionof the Vocational Training Functions, March 2001
No. 15 Risk-Averting Portfolio Trends of Japanese Households, March 2001
No. 14 Consumption Demand Trends and the Structure of Supply: Focus on Retail Industry Supply Behavior,
March 2001
No. 13 Recent Trends in the Japanese Economy: Weakness of Current Economic Recovery and Its Background,
March 2001
No. 12 Empirical Reassessment of Japanese Corporate Investment Behavior: Features and Changes since the1980s, based on Micro-level Panel Data, March 2001
No. 11 Survey on Planned Capital Spending for Fiscal Years 1999, 2000 and 2001, October 2000
No. 10 Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on EnterpriseData, September 2000
No. 9

Recent Trends in the Japanese Economy: Information Technology and the Economy, September 2000

No. 8

Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries,
June 2000

No. 7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, June 2000

No. 6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology and Market
for Underground Remediation, May 2000

No. 5

Recent Trends in the Japanese Economy: The 1990s in Retrospect, March 2000

No. 4

Destabilized Consumption and the Post-bubble Consumer Environment, February 2000

No. 3The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations, theDebt Burden and Other Structural Factors, January 2000

No. 2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No. 1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other AsianCountries, November 1999

JDB Research Report
No. 96 Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August 1999
No. 95 Efforts to Protect the Natural Environment in the United States and Germany: Environmental Mitigation and Biotope Conservation, July 1999
No. 94 Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999
No. 93 Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO sector
through comparison with Germany, June 1999
No. 92 The Impact of Demographic Changes on Consumption and Savings, March 1999
No. 91 Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March 1999
No. 90 Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999
No. 89 Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between Japan and the U.S., December 1998
No. 88 Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998
No. 87 Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998
No. 86 Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998
No. 85 Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998
No. 84 R&D Stock and Trade Structure in Japan, August 1998
No. 83 Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998
No. 82 The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public Acceptanceis Essential, May 1998
No. 81 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997 and1998 Conducted in August 1997, March 1998
No. 80 Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998
No. 79 Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January 1998
No. 78 Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series and Environmental Cost, January 1998
No. 77 Current Conditions and Issues of Computerization in the Health Care Industry: For the Construction of
a Health Care Information Network, January 1998
No. 76 Household Consumption and Saving in Japan, December 1997
No. 75 The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to Support
Diverse Consumer Choices, November 1997
No. 74 Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on International
Trade, October 1997
No. 73 The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on the Effects on Productivity and Employment, October 1997

No. 72 An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997
No. 71 Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of Economic Recovery, August 1997
No. 70 Corporate Fundraising: An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm Data
from Japan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March 1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulation of theElectric Power Industry in Japan and Implication of Experiences in the United States, December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key, October 1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of the Current Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the UnitedStates and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and 1996
Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996
No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995 and1996 Conducted in August 1995, October 1995
No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October 1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October 1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part 2, July 1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery Industry, June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and 1995
Conducted in March 1995, June 1995

No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March 1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private Level,
May 1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994 and1995 Conducted in August 1994 , November 1994
No. 40 Selected Summaries of Research Reports Published in FY1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and 1994
Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration, December
1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993
No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993 and1994 Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and 1993
Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992 and1993 Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and 1992
Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992
No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s, February
1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991 and1992 Conducted in August 1991, September 1991
No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and 1991
Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990 and1991 Conducted in August 1990, September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment andTechnology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and 1990
Conducted in February 1990, March 1990
No. 18 Petrochemicals in Japan, The US, and Korea an Assessment of Economic Efficiency, February 1990

No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989 and1990 Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly Industrializing
Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years 1988
and 1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988 and1989 Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and ASEANCountries, June 1988
No. 9

Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987