Quick briefing: what are space weather risks and how can organisations manage them

A solar storm could expose the global economy to lossses of up to $9.1trillion, according to new research from Lloyds.

The global economic losses are modelled across three severity levels, ranging from $1.2 trillion in the least severe scenario to $9.1 trillion in the most extreme, equivalent to a reduction in global GDP of between 0.2% and 1.4%.  

Lloyd’s of London chairman Bruce Carnegie-Brown has said that the “risk posed by space weather presents a significant threat to our life on earth”.

North America is identified as the region likely to be most financially impacted by the scenario, suffering a potential economic loss of $755 billion over the modelled five year period.

However, the gap between the impact on North America and Europe is relatively small, with Europe calculated to take a $697 billion hit to GDP. 

In the UK, where the threat from space weather is recognised on the National Risk Register, the UK Research and Innovation’s SWIMMR programme estimates that Global Navigation Satellite Systems (GNSS) alone are estimated to support £320 billion of UK GDP. 

Greater China and Asia Pacific have modelled impacts of $428 billion and $375 billion respectively. Pacific have modelled impacts of $428 billion and $375 billion respectively.

What is a solar storm?

A solar storm is a sudden and intense burst of radiation, with energetic particles blasted from the sun.

They are a powerful phenomenon that occur when the Sun’s complex and twisted magnetic field releases huge amounts of energy.

This can result in intense bursts of light called ‘solar flares’, superheated plasma known as a ‘coronal mass ejections’ (CMEs), or highly charged particles being blasted into space.

When these eruptions interact with the Earth’s natural magnetic field, they can create geomagnetic storms that have the potential to disrupt the digital systems we heavily rely on in our modern way of life. 

What are the risks for businesses?

If large enough and directed towards Earth, the resulting space weather from solar storms has the potential to severely damage critical infrastructure and create significant disruption across multiple industries.

For example, the 1859 Carrington Event is the largest recorded solar storm.

Seventeen hours after Astronomer Richard Carrington saw a solar flare through his telescope, an enormous and unprecedented geomagnetic storm was creating worldwide disruption on Earth, including damaging telegraph wires and igniting fires at telegraph stations in North America and Europe.

The Lloyds analysis said: “Technology and communications infrastructure is no longer in its infancy. If this event happened today, it could cause significant disruption across energy grids, satellites, navigation systems, and communication, transportation and financial networks – vital systems relied upon daily by businesses, governments and society globally.”

Rebekah Clement, Lloyd’s corporate affairs director said: “Our research continues to highlight the need for businesses to be prepared and proactive against global risks.

“Historically extreme space weather has been rare, however, by equipping businesses, governments and insurers with data-based models we’re encouraging effective preparation stronger collaboration.”

How to manage the risks

Carnegie-Brown said that the risks desperately need to be understood and working with the space scientific community was vital.

“We have the capability to provide property cover and support resilience plans,” he explained. “Information is the most valuable currency in this market. If we are to underwrite the risk, we must understand it. The world is still unprepared for a Carrington-level event, experienced in 1859.

“There is much more to do to improve resilience. This summer will see the sun enter the maximum phase of its 11-year cycle.”

The insurance industry has developed a range of specialist solutions to help manage the risks associated with solar storms. At the time of publication, Lloyd’s covers nearly a third of all global space risks, including comprehensive protection for satellites.

To ensure business continuity across impacted sectors, other insurance policies available for financial safeguard include energy insurance, business interruption insurance, aviation insurance, marine insurance and agriculture insurance.