Bloomberg Intelligence cautions insurers about solar storms’ black swan risk.

By Oliver Townsend Jun 5, 2024
Bloomberg Intelligence warns insurers of black swan risk from solar space storms.jpegOrginal image from:

Bloomberg Intelligence has issued a warning to insurers about the black swan risk posed by solar space storms. The research division of Bloomberg LP, Bloomberg Intelligence, cautions that these major space storms could have a more significant financial impact than events like Hurricane Katrina. The disruptions caused by these storms could affect radio communications, power grids, spacecraft, and satellite navigation, especially as the current solar cycle is set to peak in 2025.

Potential Impact of Solar Space Storms

On May 10, the National Oceanic and Atmospheric Administration’s space weather prediction center issued a warning about a large sunspot cluster producing intense solar flares. These solar flares, along with associated coronal mass ejections (CMEs), were directed towards Earth. CMEs are bursts of plasma and magnetic fields from the sun’s corona that can trigger magnetic storms on Earth, leading to disruptions in various infrastructures such as communications, power grids, navigation systems, and satellite operations.

Analysis by Bloomberg Intelligence

Charles Graham, Senior Industry Analyst at Bloomberg Intelligence, highlighted the impact of a recent solar storm event from May 10-12. While the disruption caused by this storm was relatively modest, with no significant power failures reported, there were deviations in electrical wave patterns across the US. Elon Musk’s Space X Starlink internet constellation experienced degraded service temporarily. The storm also resulted in navigational errors in equipment relying on GPS, leading to some farmers in the US and Canada halting planting activities. Aircraft were diverted to minimize radiation exposure to passengers and crew.

Graham noted that the outcome could have been much worse, emphasizing why the UK considers space storms a high-priority natural hazard in its National Risk Register. The G5 classification of the event represents the highest level on the space weather prediction center’s geomagnetic storm warning scale. The last G5 storm in October 2003 caused power outages in Sweden and damaged transformers in South Africa.

Importance of Timely Notification

Bloomberg Intelligence underscores the importance of timely notification of solar storm occurrences to protect our increasingly interconnected digital sphere. Organizations like the National Oceanic Atmospheric Administration and the Met Office play a crucial role in monitoring solar phenomena to detect approaching solar flares and CMEs towards Earth. Such early warnings are essential for safeguarding infrastructures and minimizing potential disruptions.

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