More than 90% of leaders across the data center value chain experienced a material disruption during the past five years, yet most organisations remain poorly prepared for disruptions that can spread across interconnected systems, according to a global study of 1,800 senior executives across 21 countries.
The study, conducted by Economist Enterprise and sponsored by FM, found that risk is increasingly accumulating across interconnected systems, while risk management remains concentrated within individual organisations.
A major weakness is preparedness for compound shocks, where multiple risks interact or one disruption triggers another. Fewer than one in three organisations conduct simulations to assess how such events could travel through interconnected systems.
The report highlights a gap between investment in resilience and actual preparedness. Around 75% of respondents said their organisations are funding resilience initiatives, while approximately two-thirds reported board-level oversight. Yet more than 80% said growth, efficiency and artificial intelligence deployment take priority when trade-offs are required.
Short-term financial objectives were identified as a barrier by 70% of respondents.
Cybersecurity was the most widely adopted resilience measure, reported by 91% of respondents. Physical protection of control systems followed at 88%, while energy-demand management stood at 87%.
However, broader resilience measures received considerably less attention. Only 12% use geographic diversification as a resilience strategy, and just 22% apply climate-informed criteria when selecting new data centre locations.
The study identifies tight coupling and concentration as two factors that can accelerate cascading failures. Data centres depend on interconnected facilities, electricity grids, telecommunications networks, cable routes and equipment suppliers. A disruption affecting one part of this ecosystem can therefore create consequences elsewhere.
Coordination with external partners is another weakness. Only 10% of organisations maintain structured crisis plans involving all critical external partners. Almost two-thirds coordinate with only selected partners, while 25% rely solely on internal planning.
Workforce shortages add another layer of risk. Approximately 60% of data centre operators reported difficulties recruiting qualified personnel. Around 35% of operators said skills shortages could contribute to infrastructure failures.
The report also identifies longer-term risks that receive relatively little attention. Fewer than 5% of respondents ranked community opposition among their top five systemic risks, while only around 10% identified technological obsolescence.
The findings have significant implications for the insurance industry. Data centres represent increasingly complex property, cyber, energy and business-interruption exposures. Traditional insurance assessments focused on individual facilities may not fully capture losses arising from interconnected and cascading failures.
For insurers and reinsurers, this creates a need for more sophisticated system-level risk assessment, scenario analysis and catastrophe modelling. Underwriting may increasingly need to consider dependencies between power infrastructure, telecommunications, suppliers, climate exposure and technology.
The report also points to a potential challenge in business-interruption insurance, particularly where losses from outages in owner-operated facilities are difficult to quantify.
As artificial intelligence drives demand for high-density computing infrastructure, technological obsolescence could become another material consideration. Facilities designed for current workloads may require significant investment to support future AI systems, potentially affecting asset values and insurance exposures.
The central risk-management lesson is that resilience cannot remain confined to individual facilities. Data centres operate within highly interconnected ecosystems, and effective preparedness requires organisations, insurers, investors and critical suppliers to understand how risks can move across those networks.
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