Here we review recent GC Capital Ideas stories on space risk and related insurance solutions.
Recent Sun Flare Event Is a Reminder of Solar Weather Hazards: On February 24, 2014 the sun once again provided a reminder of the potential hazards of solar weather events. A large solar flare was reported by the National Aeronautics and Space Administration (NASA) measuring at X4.9 (or according to the National Weather Service’s Space Prediction Center, an R3 (strong) Solar Flare Radio Blackout) that could cause severe disruption to satellites and technology on Earth.
Space (Re)insurance Solutions: Weather Risk: Space weather risks are difficult to quantify due to the lack of understanding and clarity about the likely duration and consequences of extreme events. However, it is clear the interconnected global economy that exists today is vulnerable to the risks posed by space weather. Indeed, extreme solar weather events have the potential to create systemic risk by triggering cascading failures across industries and regions.
Space (Re)insurance Solutions: Debris Risk: Risks emanating from space pose a serious and real threat to the (re)insurance sector. Space debris and satellite collisions have the potential to cause losses in the millions or even billions of dollars, while extreme space weather has the potential to cause systemic failures across the globe. Although both risks are difficult to quantify given the uncertainty involved, (re)insurers have a responsibility to promote risk mitigating measures as the potential costs involved are considerable.
Solar Weather Activity: Solar weather is a space-related risk that has the potential to cause huge disruption to infrastructure and businesses around the world. Geomagnetic storm activity is not a new development but technological advancements and an increasingly interconnected global economy have resulted in increased vulnerability. Although extreme solar storms are relatively rare, there have been several notable recent events that have had a damaging impact on Earth. More are certain to occur in the future.
Space Debris Risk: Part I, Orbital Regions: The most serious threat to high-value satellites and space infrastructures in the Earth’s orbit today is the risk of collision with other satellites or space debris. As more satellites are sent into the Earth’s orbit to provide services and technology we now take for granted, including global communications and broadcasting, air traffic control, weather forecasting and disaster management, the area is becoming increasingly cluttered with satellites (operational and defunct) and other fragments, enhancing the risk of collision. Although deorbiting strategies are in place for some modern satellites, tens of thousands of objects still circulate the planet at extremely high speeds.
Space Debris Risk: Part II, Collision Risk: Space debris poses a serious risk to operational satellites, particularly in the low earth orbit (LEO) and geosynchronous orbit (GEO). Indeed, debris amounts are increasing as objects continue to collide with one another, producing more fragments. According to the U.S. Strategic Command’s Space Surveillance Network, more than 20,000 objects above ten centimeters in size are currently orbiting Earth. Of these, only some 1,000 are active satellites. For items measuring between one and ten centimeters, around 500,000 particles are thought to be orbiting Earth. Estimates suggest tens of millions of other particles smaller than one centimeter are circulating the planet. All this material is traveling at several kilometers per second, sufficient velocity to cause significant damage to operational satellites.