RISK MANAGEMENT
continued from page 18
our reliance on electrical power—and
the vulnerability of our grid to geomagnetic storms.
In the 22 years since the Quebec grid
was damaged, global companies and
regional economies have increased reliance on the electrical grid dramatically,
meaning the impact today of a similar
solar event would be even more drastic.
RISK-MANAGEMENT PREPARATIONS
Quantifying financial exposure to space-weather events is challenging. When
doing so, risk managers should consider
plans for both short-term and long-term
power outages.
In this context, short-term means
hours to a day, with a recurrence interval
of a few years. Power-outage-mitigation
plans could include back-up generators for
critical systems, redundant and co-located
SPACE WEATHER
continued from page 18
at the Sun and are a consequence
of its magnetic outbursts. The Sun’s
magnetic activity is periodic, with a
peak in activity approximately every
11 years. For several years surrounding
this peak, the chance of solar storms is
software and data systems (especially for
revenue, customer-facing and customer-
service operations), or a contingent busi-
ness-interruption policy that covers utility
outage. Where supply-chain risks are im-
portant, a tailored contingent business-
interruption policy should be in place.
tions when it becomes clear the outage
will last longer than a specified time period. Data access at new locations should
also be considered.
Beyond financial exposure, another
non-trivial aspect is communication—
how will management communicate with
each other, employees, partners and customers? Corporate reputation and employee morale should be addressed within
the company’s risk-management plan.
Companies that communicate proactively are viewed as trustworthy leaders by
their customers, employees, the media and
local government. Organizations that appear to change their spokesperson or alter
their plans every few days, however, are
perceived as unprepared. When the problems continue for days or months, public
patience can dissolve into a feeding frenzy.
While the chance of a space-weather-caused long-term outage is small, it cannot
be disregarded—if such an event does occur, the cost would be staggering. NU
Nicole Homeier is staff scientist in remote
sensing at Atmospheric and Environmental
Research (AER). She may be reached at nho-
meier@aer.com. Kyle Beatty is managing director
of business solutions at AER, providing risk-management and meteorological expertise globally. He
may be reached at kbeatty@aer.com. James Martin
Griffin is staff scientist at AER, involved in space-weather research. He may be reached at jgriffin@aer.
com. The authors are located at AER headquarters in
Lexington, Mass.
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