By DAN REYNOLDS, senior editor of Risk & Insurance®
The current 11-year solar storm cycle, called Solar Cycle 24, which will be characterized by solar flares that erupt from sun spots, is predicted to peak in late 2011 and into 2012.
The cycle that we are about to see the peak of could be the most intense in the 400 years that these events have been recorded, said David Hathaway, of the Marshall Flight Space Center.
When they erupt, solar flares send massive electric currents into space and sometimes those powerful electric waves strike the earth at speeds of more than a million miles an hour. In 1989, half of Quebec lost its power during a particularly violent outbreak of solar flares.
Now risk managers, consider this. Remember that nasty power outage that struck the Northeast and Canada back in August of 2003? More than 55 million people were affected and the cost of spoiled products, business interruption and other losses reached $6 billion, about half of it covered by insurance.
Adding to this potent brew of risk is the fact that we experienced a tremendous heat wave on the East Coast this summer which will add more strain to an already fragile power grid. In short, we are facing more pressure on a system that is less able to handle it.
According to a Philadelphia-area power grid provider, its 51 million customers had consumed about 16 percent more electricity this summer than they had last summer.
When solar storms strike, GPS systems and other forms of satellite communications are at risk. The 2003 blackout resulted in the shut down of 22 nuclear power plants and more than 500 generating units at more than 250 plants. Airlines suffered business interruption to the tune of more than 700 cancelled domestic flights.
The storm that knocked out Quebec in 1989 was classified as an X14, but solar storms twice as powerful have been recorded. An X28 on Nov. 4, 2003, would have done a lot of damage had it struck Earth: Lucky for us it didn't. As it turned out, now with the advantage of hindsight, it was the most powerful of its kind in recorded history.
The threat of business interruption from a solar storm is very real. This isn't Y2K, something that was predicted could happen and didn't. These storms could happen because they have happened.
(Read Managing Editor Cyril Tuohy's counterpoint argument, "Solar Storms Are Mere Spin.")
October 15, 2010
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