The last frontier: risk management for space innovations

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The market for low Earth orbit satellite launches will continue to grow due to a dramatic reduction in costs associated with launches and an increase in interest in low Earth orbit exploration, according to AXA Xl. (Photo: cristimatei / iStockphoto)

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Last year, as we on Earth battled the effects of a global pandemic, there had been no pause in the number of satellites launched into space. Indeed, the volume of low Earth orbit launches was the highest since 1990 at 95, and it is expected to grow exponentially over the next few years.

Low Earth Orbit (LEO) is an orbit at an altitude of approximately 1,000 kilometers or less from the Earth’s surface.

The cost of launching in LEO has been cut by 20 over the past 20 years, which means more and more customers are looking to send satellites into orbit. And a multitude of different uses for LEO satellites means that there are many different types of customers in the market – telecommunications companies, national armies, scientific research organizations, to name a few. There is therefore a great diversity of interest, use and experience. All of this adds to the diversity of risk.

Space risks

The past year not only saw a high volume of LEO launches, it also had the highest launcher failure rate in over 20 years. Because many of these launchers were newly designed and built, they carried a greater risk of failure. Obviously, this is a risk that underwriters and risk professionals have in mind.

Once they’ve been launched, if the satellites suffer damage or failure, or need to be refueled, it’s not as easy as taking a car to a garage or gas station. At some point in their lifecycle, satellites will break down, and in layman’s terms, unless the problem is software-based and can be managed from the ground up, there’s no real way to fix it. .

This means that there is debris floating in LEO, and the more satellites there are, the greater the amount of debris. This increases the risk of collision and damage to satellites still in operation.

Satellites that launch into LEO are generally smaller than those launched into higher orbits. Their small size can make them sensitive to space weather – which is cyclical – and subject to the risk of stress from solar radiation, among others.

If we can capture accurate and reliable historical loss data on the causes of satellite failures, we can better underwrite and predict risks for new launches.

Space insurance

Insurance coverage plays an important role in enabling space launches and covers all three phases of the satellite orbit. First, insurance can cover risks associated with the flight of the launcher, from the ignition of this launch to the separation of the satellite in orbit.

Insurance can also be taken out to transfer risks that may arise in the post-separation phase, initial operational phase, orbiting, developments and tests, and life in orbit to the point of acceptance.

Third, insurance can cover the risks of the in-orbit life of a satellite. This coverage is taken out on an annual basis and is revised according to the state of health of the satellite.

In addition to coverages such as unplanned business disruptions for satellite owners, business disruptions for satellite users, and cargo / maritime goods coverage for satellite manufacturers and launch service providers, Specialty insurers may offer additional risk transfer for things such as engine tests, in-orbit maintenance, manned space flights and space ports, and political and credit risk coverage for the launch delay, between others. Currently, about half of all launches carry insured satellites.

Durability

As British astronomer Fred Hoyle observed, space is not that far from Earth. Indeed, we – as planet Earth – are part of space ourselves. Hoyle noted that “the space is not far away at all. It was only an hour’s drive if your car could go straight up.

And just as protecting the environment and moving towards sustainability have become corporate and societal drivers here on Earth, so they should be in space.

The rapid increase in the volume of space traffic, especially in low earth orbit, increases the risk of collisions quite significantly. This, in turn, increases the potential for debris and fallout.

Today, there are around 3,000 active satellites in orbit; by 2030 there will probably be as many as 100,000. We have to ask ourselves, ‘How do we make this a sustainable market? We believe that harnessing and extrapolating the data we can collect through our partnership can help improve risk management and therefore sustainability.

Use of data

The sensors also give us the opportunity to try to better understand space weather and its impact on Earth.

Space weather can affect the Earth in several ways. For example, solar flares can create radio thunderstorms, solar energetic particles can cause power outages in satellites, and coronal mass ejections can cause geomagnetic storms on Earth that can affect power grids, among others.

The data that we can exploit on space weather could, in our opinion, help us better manage risks on the ground.

Sensors can also help us better understand the effect of angular drag on satellites, which will also help us understand the forces that act on orbiting satellites and the risks they pose.

We believe that the data that can be derived and exploited through the use of space situational awareness sensors will also help create robust new regulations for launches and orbits. In turn, stricter international regulations will help improve safety and sustainability.

To infinity and beyond

We believe this is the start of a movement to make better use of space. Space risks are manageable. And in space, just like on Earth, sophisticated risk management starts with good data. If we can better understand the life cycle of a satellite – the risks it faces and withstands and the effects of various influences on its lifespan – we can better cover the space risks and play our part in it. improving the sustainability of the space.

A better understanding of the risks to LEO satellites can, in our opinion, only stimulate the market and spark new innovations as humanity continues to explore space.

Denis Bousquet is global technical director of space insurance at AXA XL, and Julien Cantegreil is CEO of the startup SpaceAble.

This article was first published by AXA and is republished here with consent.

Leer este artículo in Spanish.

Related: What Is The Impact Of Satellite Constellations On Space Risk?


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