The global economy could be exposed to an estimated US$2.4 trillion in losses over a five-year period, with an expected loss of US$17 billion from a hypothetical solar storm, according to Lloyd’s latest systemic risk scenario.
The scenario models losses across three severity levels, ranging from US$1.2 trillion in the least severe case to US$9.1 trillion in the most extreme, which would equate to a reduction in global GDP of between 0.2% and 1.4%.
North America is identified as the region most likely to experience financial losses, with an estimated economic impact of US$755 billion over five years. Europe follows closely with a projected US$697 billion loss, with Greater China and Asia-Pacific facing potential losses of US$428 billion and US$375 billion, respectively.
“Our research continues to highlight the need for businesses to be prepared and proactive against global risks,” said Rebekah Clement, Lloyd’s corporate affairs director. “Historically extreme space weather has been rare, however, by equipping businesses, governments and insurers with data-based models we’re encouraging effective preparation and stronger collaboration.”
If such an event were to occur, however, Lloyd’s said it could damage critical infrastructure, including energy grids and satellite networks, as well as disrupt power, navigation, communications and financial systems relied upon by businesses, governments and populations worldwide.
In May 2024, a series of solar storms affected the Earth, with experts saying the series was the most powerful geomagnetic storm to affect the planet since March 1989. A Bloomberg Intelligence report observed that the space storm may be a precursor to more severe events as the current solar cycle is expected to peak this year.
Lloyd’s provides coverage for nearly a third of all global space risks, including satellite insurance. The insurance industry has also developed specialist products to address risks linked to solar storms, including energy insurance and marine insurance. These policies aim to support business continuity across affected sectors.
The scenario is the final in a series of seven developed by Lloyd’s Futureset in collaboration with the Cambridge Centre for Risk Studies. The initiative seeks to encourage discussions and solutions to mitigate significant global risks
