- Lloyd’s publishes latest systemic risk scenario highlighting the potential global economic loss from the threat of a hypothetical solar storm.
- Photography exhibition ‘Life in the Sun’s Atmosphere: From Disruption to Resilience’ by acclaimed photographer Max Alexander showcases the potential risks from solar activity and the progress underway to build greater resilience across critical infrastructure.
- Attendees include Lloyd’s Chair Bruce Carnegie-Brown, Parliamentary Secretary for the Cabinet Office Abena Oppong-Asare MP and The BBC’s Sky at Night presenter Professor Lucie Green.
Lloyd’s, the world’s leading marketplace for insurance and reinsurance, has published its latest systemic risk scenario highlighting that the global economy could be exposed to losses of $2.4 trillion over a five-year period, with the expected loss of $17 billion from the threat of a hypothetical solar storm.
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%.
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. 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.
If this event happened today, it could cause damage to critical infrastructure such as energy grids and satellite networks, and disrupt power, navigation, communications and financial systems which are relied upon daily by businesses, governments and populations globally.
Renowned space photographer and commentator Max Alexander’s exhibition ‘Life in the Sun’s Atmosphere: From Disruption to Resilience’ will be unveiled as part of a flagship event held in the iconic Lloyd’s Underwriting Room in the heart of The City, with space weather experts, leading insurance industry figures, and UK Government representatives in attendance.
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.
The scenario is the seventh and final scenario produced by Lloyd’s Futureset and the Cambridge Centre for Risk Studies, which aims to encourage proactive conversations and solutions to mitigating risks against the most significant risks facing society today.
Read the scenario “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.”Rebekah Clement, Lloyd’s Corporate Affairs Director
"The Lloyd’s Underwriting Room is synonymous with supporting the very limits of human exploration and knowledge gathering. My aim for this exhibition is to showcase not only the incredible power of the sun as the lifeblood of our solar system, but the very real risks that its power can ultimately present for our everyday lives and infrastructure.”Max Alexander, Photographer and Science Communicator
Notes to Editors
- "Life in the Sun’s Atmosphere: From Disruption to Resilience” is a photography-led science communication project focused on the disruption that space weather can and will have on the Earth’s infrastructure and networks. The exhibition will be hosted on the Lloyd’s Underwriting Room between 3 and 14 March. The Sun is on an 11-year cycle, and the timing of the exhibition coincides with the build-up to a period of “solar maximum” in 2025, when the Sun is at its most active and the threat of damage and disruption from space weather is at its highest.
- Lloyd’s Futureset will be holding a launch event for the exhibition on Tuesday 4 March 2025, featuring speakers including Lloyd’s Chair Bruce Carnegie-Brown, Parliamentary Secretary for the Cabinet Office Abena Oppong-Asare MP, The BBC’s Sky at Night presenter Professor Lucie Green and international experts in space weather risk.
- An award-winning photographer and creative strategist, Max Alexander specialises in space communication through visual storytelling. His ground-breaking exhibition, “Our Fragile Space”, launched at Lloyd’s in 2022 and has since been displayed at the United Nations in New York and Vienna, at the European Parliament and on The Mound in Edinburgh. It has impacted on space policy in the UK and in Europe.
- A ‘solar storm’ is a sudden and intense burst of radiation and energetic particles blasted from the Sun. If large enough and directed towards Earth, the resulting ‘space weather’ has the potential to severely damage critical infrastructure and create significant disruption across multiple industries and our everyday activities.
- A ‘systemic risk’ is a low likelihood, high impact risk which affects either a systemically important global enterprise or multiple sectors, societies, or national economies. They can be global in impact, often hitting billions of people simultaneously. Other risk scenarios explored in the research include: human pandemic, cyber-attack, extreme weather events leading to food and water shock, economic stagnation and geopolitical conflict.
- Produced in partnership with the Cambridge Centre for Risk Studies, the research explores hypothetical but plausible systemic risk scenarios and is complimented by an interactive data tool that allows users to reveal the potential economic and insurance impact of each scenario across 107 countries and at three levels of severity (major, severe and extreme).
- Using global Gross Domestic Product (GDP) as its central measurement, Lloyd’s and University of Cambridge model calculates the global economic loss of a solar storm scenario as:
- $2.4trn is the global economic loss over a five-year period (the probability weighted average across the three severities we have modelled)
- The global economic loss ranges from $1.2trn in the lowest severity scenario up to $9.1trn in the most extreme scenario
- The scenario severities have been given a probability of occurring in the next five years, based on several risk factors.
- An ‘expected loss’ of $17 billion represents the economic loss multiplied by the probability of the event occurring.
- 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.
- The scenario has been designed and calculated by analysing historical geomagnetic storms and their socio-economic impacts. The assessment of impact to GDP at each severity level of the scenario is based on a combination of scenario modelling, historical studies, and academic expertise. The assessment considers how different regions might manage the initial impacts of a solar storm, and the long-term economic impacts of a solar storm, such as effects on the electricity grid, satellite and logistical disruptions for supply chains.
Examples of the types of insurance designed to mitigate these economic impacts include:
- Energy insurance: A geomagnetic storm could overload transformers and cause cascading failures in the electricity grid. Energy insurance provides critical financial support to energy suppliers and operators by covering the costs associated with machinery breakdown and repair or replacement of damaged energy-related infrastructure.
- Business interruption insurance: The reliance on technology, power and communication connectivity means that in the face of a power outage or global navigation satellite system (GNSS) disruption, business operations can come to a standstill. Business interruption insurance provides coverage for the extra costs involved with getting back online and income lost during the downtime, after a defined interruption period has passed.
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