Lloyd's space weather scenario sees $2.4 trillion economic impact

By Rebecca Delaney

March 4 - (The Insurer) - Lloyd's latest systemic risk scenario has found that the global economy could be exposed to potential losses of $2.4 trillion over a five-year period from the threat of hypothetical extreme space weather.

Economic losses range from $1.2 trillion in the least severe scenario to $9.1 trillion in the most extreme case, equivalent to a reduction in GDP of between 0.2% and 1.4%.

The threat of solar storm accounts for an expected loss of $17 billion.

Losses would be primarily driven by damage to critical infrastructure, including energy grids and satellite networks, as well as disruption to power, navigation, communications and financial systems.

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

However, Lloyd's noted that the gap between 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.

Lloyd's outlined several specialist industry solutions for this scenario. The market currently covers almost one-third of all global space risks, including comprehensive protection for satellites. To ensure business continuity across impacted sectors, other available insurance policies include energy insurance, business interruption insurance, aviation insurance, marine insurance and agriculture insurance.

This scenario is the seventh and final scenario produced by Lloyd’s Futureset in partnership with the Cambridge Centre for Risk Studies.