The risk takers

The area of space risk assessment and insurance is a niche market but an extremely important part of any space programme. Helen Jameson finds out more about the business and how it all works.

The space industry is today valued at approximately $251 billion. The changes that the industry has gone through since the first satellite was launched over 50 years ago have been enormous. Satellites have become a great deal more complex and more expensive as a result. The skies are getting fuller every year with satellites operating with smaller and smaller separation distances. Satellite operators and manufacturers are becoming more ambitious with their satellite programmes. Take O3b Networks that has already embarked on a satellite project that will ultimately bring high speed, low-cost connectivity to the Asian, African, Latin American and Middle Eastern markets via a constellation of 16 satellites. The satellites will be launched by Sea Launch who is currently developing a special dispenser to enable them to place 8 spacecraft into orbit per launch. This highly ambitious programme is just an example of the way in which the industry is moving. It wants to be bigger, better and faster, producing more impressive capabilities and increasing capacity and flexibility to fulfil the demands of their customers.

In the early days of the satellite story, satellites were often destroyed as man learned how to build and launch them but nowadays, with satellites playing a significant part in our everyday lives and underpinning crucial communications services and networks, the need to insure them has become vital. You would not leave your house, your biggest asset, uninsured against fire or flooding. For the same reasons, each satellite that is launched, and the process it goes through to get into orbit, must be covered against loss. They are expensive and take time to replace and, as we all know, in this day and age, time is money and cannot be wasted.

The advent of space tourism is also bound to be significant in terms of risk assessment and insurance, where manned space vehicles will be taking paying customers into space. It will be down to individuals to take on that risk, as they do when taking part in adventure sports. Most people do consider space travel to be a high-risk activity. It will be important for risk assessors to bear this in mind for future public space travel. The Apollo and Gemini missions did not have a fixation on risk assessment when they were pushing forward the frontiers, but in the context of taking the general public into space, risk is something that must be calculated and mitigated.

Assessing the risk of all these ventures is key. These spacecraft must be insured. The loss of a spacecraft would otherwise be devastating. By its very nature, the satellite business is risk-filled. The launch, the placing into orbit, the deployment of the satellite components such as solar arrays, the testing and remainder of the life of the satellite - all must all be taken into account by the underwriters. It is a highly complex and lengthy job to do. Every programme is different. As Philippe Montpert, managing director of Willis Inspace told Satellite Evolution in his interview in this issue, ‘there is no one size fits all solution’. Elements of risk vary greatly and each case must be taken on its own characteristics.

Recent Problems

Over the past two years the satellite industry has suffered some problems including launch failures, satellite loss and damage to satellite assets. These included the loss of SES Americom’s AMC-14 satellite in April 2008 when an anomaly occurred during the second burn of the fourth stage of the rocket resulted in the satellite being placed short of the planned geostationary transfer orbit. The satellite was declared a total loss as it could not be re-positioned. The satellite was fully insured for a total of $150 million. In early 2007, New Skies experienced a launch failure and lost their NSS-9 satellite. This was followed by another failure in September 2007 when the JCSAT-11 satellite failed to be placed into orbit. These are just a couple of illustrations that highight the fact that the satellite industry is fraught with risk.

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