Power blackouts can ruin our supply of frozen groceries, plunge us into darkness, cut off access to the internet and make things generally miserable and inconvenient at home. This is bad enough. But on a macroeconomic level - and over a long period - outages can cripple a region’s business activities, disrupt public services and satellite communications as well threaten the viability of the whole economy.
And the frightening thought is that the likelihood of something like this actually occurring could increase in the future, not only because of the growing interconnectedness of electricity grids and ageing infrastructure but also as a consequence of solar storms. According to a study paper recently published by Lloyd's entitled "The Solar Storm Risk to the North American Electric Grid," the geomagnetic or solar storm risk is projected to peak in early 2015.
The CRO Forum publication, "Power Blackout Risks," drew attention to the consequences of prolonged power outages back in November 2011. This paper, to which Swiss Re was a major contributor, also described the serious impact solar storms can have on power grids.
Additionally, the Emerging Risk team at Swiss Re has compiled an attractive infographic "Solar storms, and what they mean for us." Among the ways governments can help mitigate this risk, the infographic says, is to improve space weather forecasts, ensure that grid operators act jointly and increase the resilience of electrical components to withstand disturbance.