Satellites are the work horses of modern society. Virtually all economic forecasts predict that the 21 st century will witness an explosion of new satellites to relay 'cellular phone', television and computer data. They will provide services to society that we cannot even imagine today. Currently, the satellite industry in both the civilian and military sectors has amassed over $100 billion in space-based assets. Only a small fraction of this investment is in scientific research satellites, which are used to learn more about the space environment, and to safeguard all the other resources.
Satellites are vulnerable to many aspects of solar activity, particularly the streams of charged particles that flow in the magnetosphere. When you shuffle across a carpet, you pick up static electricity, which you then discharge in a painful 'zap' when you touch a grounded metal object. In space, satellites pick up charged particles constantly, but they cannot be so easily 'grounded' to discharge their load of static charge. As a result, satellites charge-up to voltages of thousands of volts. The smallest dust particle can cause a lightning bolt of discharge to 'zap' delicate electronic equipment. These discharges can cause false commands that can sometimes send the satellites into bizarre and unplanned 'states' which can cause the satellite to be lost.
Satellite designers work around this problem. They are making certain that as much as possible of the critical electronics in a satellite are 'radiation hardened'. They are designing radiation-hardened versions of many common components. For example, the fastest space qualified computer is a 486-based processor running at 33 megahertz! Only recently has the Space Shuttle been upgraded to such speeds.
The succeptibility of satellites to such damage is usually a well-kept secret. The Department of Defence would not want potential enemies to know how easily its satellites might be affected during solar storm activity. Commercial satellite companies regularly obtain satellite insurance policies from Lloyds of London and other insurance broakers, but these policies will not pay out millions of dollars if the satellite is lost due to natural causes.