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By DAN REYNOLDS, senior editor of Risk & Insurance®

Scenario: New York, 3:30 pm, May 14, 2013--A withering mass of material ejected from the surface of the sun, what scientists call a coronal mass ejection, occurred three days previously. The sun surface matter is just now striking Earth, battering the planet with countless billions of solar energy particles.

Air traffic over the polar regions is halted because planes in that area depend on satellites for communications. Business interruption on a wide scale occurs, from the redirection of airline traffic to the malfunctioning of cellphone towers.

Swaths of the U.S. electrical grid shut down, closing factories, schools, police stations and other government offices. Deep-sea drilling rigs run off-center, breaking mile-long drilling systems as the solar energy effects magnetic directional devices.

The commercial wireless grid halts and cell phones and other consumer devices that lack hardened digital chips shut down. Vaunted 4G networks go dark. For the iPad 2, just in its infancy, the signal bars disappear from the screen.

Office buildings are plunged into darkness. And the refrigeration units that depend on electricity to keep fresh and safe the food for supermarkets and restaurants are no longer functional and won't be for days.

Traffic lights aren't functioning. The normally tumultuous traffic patterns in big cities from Boston to Miami, Dallas to Seattle, Phoenix to Denver, snarl because of widespread accidents.

At night, there are no lights.

But it's not just New York, or Chicago, or Los Angeles ... or Paris, or London, or Tokyo that are affected.

What scientists call a "creeping dependency" globally on interconnected financial and industrial systems causes massive disruptions to world economic trading systems.

Flash crashes occur as systems malfunction and billions of dollars in market value are wiped from publicly traded companies in a matter of seconds. The impact of the coronal mass ejection represents another weakening in investors' faith in the global financial system.

U.S. defense systems are also compromised. Solar weather jams U.S. Defense Department radio-transmission systems and leads to false readings of incoming, hostile-flying objects.

Analysis: This frightening scenario is not fictional, at least from the perspective of scientific probability.

What scientists call coronal mass ejections have hit this planet before, and will do so again. The largest one in recorded memory occurred in 1859. It was dubbed the Carrington event, so named for the English vicar and astronomer who witnessed it and recorded its effects.

At the time the massive magnetic disturbance drove electricity through telegraph wires, destroying them and even knocking telegraph operators unconscious.

In our modern digital age, which has become so much more dependent on technology, the consequences of such an event would be far more drastic, and extremely expensive.

Making matters more pressing, scientists predict a heightened period of solar weather activity between 2012 and 2015, with another peak expected for 2024. These cycles are regular and they are made all that much more risky because of our dependence on technology.

"In the last 25 years, the world has changed immeasurably in terms of its reliance on digital technology and if we would have a similar space event there would be that impact," said Trevor Maynard, the London-based manager of emerging risks for Lloyd's.

In conjunction with the Rutherford Appleton Laboratory within the Science and Technology Facilities Council, a department of the British government, Lloyd's has released a study detailing how vast the damage could be from a coronal mass ejection.

The study examines the business interruption and property losses that occur as a result of extreme solar weather events. The lead author of the study is Mike Hapgood, head of the Space Environment Group at RAL Space, a visiting professor at Lancaster University and an international authority on space weather.

The study outlines numerous space weather events that have had an effect on the planet, and the ongoing mitigation measures to prevent future damage.

To wit: The failure in April 2010 of Intelstat's Galaxy-15 satellite is believed by the study's authors to have been caused by a space weather event.

Galaxy-15--RIP--has now been nicknamed a "zombie spacecraft" because it no longer responds to commands and is functioning autonomously. The loss involved is estimated at $100 million.

In January 2005, a series of space weather surges caused United Airlines to reroute 26 transpolar flights because satellite communications systems were compromised by space weather.

Cargo flights could no longer fly point-to-point to some destinations, and United incurred higher fuel costs as planes were prevented from flying over the poles.

That kind of nonphysical business interruption isn't even covered by insurance. More difficult yet, a coronal mass ejection is entirely unpredictable. It could happen at any time, and if it hits earth with any force, it could shut down a power grid or parts of it within 90 seconds.

"The time scale is unknown," Lloyd's Maynard said. "It could be next year, it literally could occur at anytime."

But there are even more risks at work here. One biological risk is the radiation levels produced by intense solar storms and their effects on humans.

One such solar storm, on Feb. 23, 1956, produced such large short-term increases in radiation levels on earth that they measured 50-fold over normal recorded levels on that day.

People worry about the radiation produced by nuclear fission from a nuclear weapon or the radiation released from the meltdown or partial meltdown of a reactor at a Chernobyl or a Fukushima.

But it's the radiation released by the sun as the hydrogen that forms its core fuses into helium that is perhaps our greatest threat. The star that gives us our light and heat is, after all, one giant nuclear reactor.

Aircraft crews are the workers most exposed to space weather radiation, and should a mass event occur, the workers' compensation tail there could be long and wide.

The Lloyd's authors advise airlines to fly at lower altitudes and to rotate staff between long-haul and short-haul shifts. Radiation exposure to airline crews is already monitored by the European Union and airlines from those countries do utilize the precaution of staggered shifts for just that very reason.

Scientists and risk managers are taking additional precautionary measures.

There is nothing we can do to stop a coronal mass ejection. But in recent years, according to the Lloyd's report, satellite navigation systems in the United States and Europe have been strengthened with backup systems and the hardening of technical components.

Canada is developing an alternate satellite system for polar air traffic, but that too will be at the mercy of solar weather, according to the Lloyd's and RAL authors.

For the threat to digital devices, manufacturers can produce and consumers should insist that the chips in digital devices are radiation-hardened. This will give devices better ability to withstand the solar particle bombardments and the risks to the Earth's magnetic field.

Since a shutdown of Quebec's power grid because of a solar storm in 1989, the power industry has also worked on ways to protect the grid during solar storms.

There is disturbing evidence that like the cumulative head injuries leading to devastating brain injuries in athletes, cumulative damage from space, not just one major event, is what shut down 13 percent of South Africa's power grid in 2003.

It's not just traditional power delivery systems that will have to be hardened, or defended.

The Lloyd's authors warn that the developers of alternate energy systems, wind farms, for example, should take the perils of solar weather into account when they design electricity transmission systems.

(Read about our third emerging risk, political risk.)

May 1, 2011

Copyright 2011© LRP Publications