NU Online News Service, July 16, 2:37 p.m. EDT

An estimated four billion people—more than half the world's population—will be tuning in to what the BBC calls the “first truly 'Digital' Olympics.”

The BBC alone, the U.K.'s official games dispatcher, will have 765 staff members at the event—a fraction of the 21,000 visiting on-the-ground journalists, transmitting thousands of hours of continuous live coverage.

Due to the heavy traffic the London 2012 Olympics will place on broadband, cellular network and radio frequency capacity, it is up to insurers and reinsurers to help globally transmit the event.

Responsibility for planning and implementing Olympic risk strategy, including mitigating event cancellation due to terrorism and other liabilities, is being taken on by the International Olympic Committee (IOC) and the London Organizing Committee of the Olympic Games (LOCOG), who are considering a risk transfer through the insurance sector, says Aspen Re.

The most cutting-edge risks, however, lie in the increasingly expensive event-broadcast rights, relying on the use of, among other technologies, the recently launched six-ton, 20 kilowatt SES-4 satellite that has beamed down hundreds of TV, HD and 3D channels since February.

Rights for the coveted full U.S. coverage of the 2010 winter and 2012 summer Olympic Games were sold to NBC for $2 billion, while YouTube has signed on to broadcast the Games for free in Asia and Africa.

Even where there is no cell coverage, handheld devices can receive streaming Olympic broadcasts via satellites, writes Lee Tookey, Aspen Re's head of aviation reinsurance, space and specialty lines, which will stress even modern levels of cellular network capacity and drive up insured values.

Satellite News Gathering (SNG) systems will provide the channels linking broadcasters and satellites, a system highly regulated by the U.K.'s Office of Communications (OFCOM), the independent regulator and competition authority for the U.K. communications industries.

London-based Inmersat is part provider of SNG capability utilizing 4-series satellites to provide live video, Internet and email transmission—but even these interstellar beasts are prone to signal-weakening space weather, a factor outside of operator control.

Intense sun-spot activity can cause temporary blackouts and even damage satellites. The first five months of 2012 were quiet compared to 1992, with an average of 81 monthly observed sunspots, but higher than in 2008 when sunspots averaged less than seven per month, says an Aspen Re whitepaper authored by Tookey.

“Insurers must be confident that they have sufficient information about the risks they underwrite, drawing on engineers' knowledge to assess the risks associated with a new project,” says Tookey. For example, “they need to understand all stages of a satellite's life—from design through construction, to launch and operation—given that coverage is broad and is essentially a product-guarantee policy.”

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