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The Joint Research Centre (JRC) is the European Commission's science and knowledge service which employs scientists to carry out research in order to provide independent scientific advice and support to EU policy.
Financial services could be disrupted in case of a severe space weather event, due to their dependency on accurate timing often provided by Global Navigation Satellite Systems (GNSS). A report published by the JRC addresses the potential impact, in particular the effect of a GNSS services loss on timing systems and the sector’s vulnerability. Awareness among operators and regulators worldwide is currently limited and resilience across the financial services sector needs to be built, authors say.
Solar activity shapes the space environment surrounding the Earth. This so-called space weather can affect both space-borne and ground-based infrastructures, including satellites, aviation, road and marine transport, banking and power grids. Society has come to depend on these infrastructures and services, and indeed they have come to depend on one another. There is therefore a fear that our vulnerability to space weather is increasing.
While most studies focus on the impact on high-voltage power grids, which are the backbone of modern society, aviation and communication, so far little attention has been paid to the possibility of disruption to the financial services sector. This sector depends on accurate timing, a service which is increasingly provided by space-weather-prone technologies. GNSS, of which the best-known is the American GPS, are commonly used for deriving time stamps for financial transactions. Precision in timing is therefore critical, in particular for high-speed trading.
The report summarises the results of a workshop held in London on 27 June 2014. Organised in partnership with the UK Civil Contingencies Secretariat and the US National Oceanic and Atmospheric Administration (NOAA), the workshop was attended by representatives from major banks, the London Stock Exchange, regulators, insurance, and European and US government agencies.
The stakeholders participating in the workshop concluded that the vulnerability of the financial services operators to space weather varies across the globe. It was recognised that during extreme space-weather situations, a severe disruption or loss of GNSS services seems certain, although timing services are more resilient than those used for navigation. This requires other timing methods or holdover capability until satellite services can be re-established. Alternative and inexpensive timing options are available, but it is not clear how widely they are deployed.
Building resilience to space weather across the financial services sector requires the identification of its vulnerabilities and options for mitigating this risk, including the use of early warning capacities that are available in Europe and the US. To cope with the risk of extreme space weather, the experts recommended a multilateral and international collaboration for emergency response planning.