Black Swans have been used extensively to describe previously unknown events of extreme impact/severity but with unknown or remote likelihood since Nassim Nicholas Taleb’s publication in 2007 of The Black Swan: The Impact of the Highly Improbable. A key takeaway from this book is that predicting the timing of these rare events is wasted effort, but preparing to respond to them is highly valuable.
In mid-2016, the Helios Solar Storm Scenario was published by Cambridge Centre for Risk Studies. In this report three scenarios were described for when solar storms occur — essentially a massive pulse of energy generated by our sun that travels in all directions and, should they hit the Earth, have the ability to disrupt or destroy anything that uses or carries an electric charge.
Apparently these solar storms run in an 11 year cycle with the last one being in August 2010. Therefore, the susceptible assets (generation, transmission and use of electricity for the masses) has experienced about 12 of these cycles yet no major issues have been reported. However, think of the growth in the use of electricity in the last 20-30 years, from extensive domestic use of electrical equipment, through computers and mobile devices. Heck, the iPhone came out in 2007.
The Helios report scenarios estimated that in the USA:
- 90m people affected, 6 months to restore full power, cost to economy of $474bn
- 145m people affected, 8 months restoration time, and $1,532 bn
- 145m people affected, 12 months restoration and $2,693bn
If such a large solar storm should happen, the impact is clearly extensive, and there is virtually no way to respond to prevent the interruption. There are, however, opportunities to mitigate the impact. Perhaps an investment in portable generators could partially offset the severity from a financial loss perspective. Whatever could happen, businesses and individuals need to have plans to respond.
Fortunately these plans will probably be usable for a wide range of “black swans” with little modifications. Keeping the plans simple may be the key.