Lloyd’s has released its latest systemic risk scenario. The analysis suggests the global economy could face losses of $2.4trn over five years, with a hypothetical solar storm causing an estimated $17bn in expected losses.
The study models economic losses across three severity levels. The least severe scenario estimates losses at $1.2trn, while the most extreme scenario projects $9.1trn in damages.
These figures equate to a potential reduction in global GDP ranging from 0.2% to 1.4%.
North America is identified as the most financially exposed region, with potential economic losses of $755bn over five years. Europe follows closely, with an estimated $697bn impact on GDP. Greater China and Asia Pacific are expected to face losses of $428bn and $375bn, respectively.
If such an event occurred today, it could damage critical infrastructure, including energy grids and satellite networks. This disruption could affect power, navigation, communications, and financial systems, impacting businesses, governments, and individuals worldwide.
Max Alexander, a well-known space photographer, will present an exhibition titled Life in the Sun’s Atmosphere: From Disruption to Resilience. The event will be held in Lloyd’s Underwriting Room, featuring experts in space weather, insurance leaders, and UK government officials.
Our research reinforces the importance of preparation for global risks. While extreme space weather events are rare, data-driven models help businesses, governments, and insurers plan effectively.
Rebekah Clement, Lloyd’s Corporate Affairs Director
The insurance industry offers several specialized solutions to manage solar storm risks. Lloyd’s currently insures nearly one-third of global space risks, including satellite protection. Other available policies that help ensure business continuity include energy, business interruption, aviation, marine, and agriculture insurance.
This scenario is the seventh and final installment in a series by Lloyd’s Futureset and the Cambridge Centre for Risk Studies. The initiative encourages discussions and solutions for major global risks.
The Lloyd’s Underwriting Room has long supported human exploration and knowledge. This exhibition highlights the Sun’s immense power and the real risks it poses to infrastructure and daily life.
Max Alexander, Photographer and Science Communicator
The Life in the Sun’s Atmosphere exhibition focuses on the risks space weather poses to global infrastructure. Hosted at Lloyd’s from March 3 to March 14, the event coincides with the Sun’s 11-year cycle, which peaks in 2025, increasing the likelihood of space weather disruptions.
Lloyd’s Futureset will launch the exhibition on March 4, 2025. Speakers will include Lloyd’s Chair Bruce Carnegie-Brown, Parliamentary Secretary for the Cabinet Office Abena Oppong-Asare MP, BBC Sky at Night presenter Professor Lucie Green, and international space weather experts.
Max Alexander, an award-winning photographer, specializes in space-related visual storytelling. His previous exhibition, Our Fragile Space, launched at Lloyd’s in 2022 and has since been displayed at the United Nations, the European Parliament, and Edinburgh. The exhibition has influenced space policy in the UK and Europe.
Understanding Solar Storms and Systemic Risks
A solar storm is a sudden burst of radiation and energetic particles from the Sun. If large enough and directed at Earth, it can damage infrastructure and disrupt industries.
A systemic risk is a low-probability, high-impact event affecting major global enterprises, industries, societies, or economies.
These risks can simultaneously impact billions of people. Other systemic risk scenarios studied include pandemics, cyberattacks, extreme weather, economic stagnation, and geopolitical conflict.
The research, developed with the Cambridge Centre for Risk Studies, includes an interactive data tool analyzing economic and insurance impacts across 107 countries at three severity levels: major, severe, and extreme.
The study estimates:
- A global economic loss of $2.4trn over five years, based on probability-weighted scenarios.
- A loss range of $1.2trn in the lowest severity scenario to $9.1trn in the most extreme.
- An expected loss of $17bn, calculated by multiplying economic impact by the probability of occurrence.
In the UK, space weather is recognized as a significant threat in the National Risk Register. UK Research and Innovation’s SWIMMR program estimates that Global Navigation Satellite Systems (GNSS) support $320bn of UK GDP.
Insurance Coverage for Solar Storm Impacts
The scenario analysis considers past geomagnetic storms and their economic effects. It evaluates both short-term and long-term GDP impacts, including electricity grid failures, satellite disruptions, and supply chain interruptions.
Examples of relevant insurance coverage include:
- Energy insurance: A geomagnetic storm could overload transformers, causing widespread electricity grid failures. Energy insurance helps cover the cost of repairing or replacing damaged infrastructure.
- Business interruption insurance: Power outages and GNSS disruptions can halt business operations. This insurance covers lost income and extra costs required to resume operations after a defined period.
