Data centres as a new asset class: Potential implications for insurance and risk management

Insurance and risk considerations

The global demand for computing power is projected to push data centre investments toward nearly US$7 trillion by 2030. Accompanied by increasing size, sophistication, and power requirements, the rising asset value of data centres will likely necessitate higher insurance limits and extended capacity to manage associated risks.

In addition, there is a growing need for more specialised coverage that reflects different leasing arrangements, service-level guarantees, emerging technologies, and sustainability initiatives.

Understanding the unique risk profile of data centres is therefore essential for developing comprehensive, multi-layered coverage strategies that effectively address the interconnected risks. These risks may include:

• Physical property infrastructure risks: Location-specific natural disasters such as earthquakes, floods, and hurricanes; property damage from fire, water, vandalism, and accidental damage; and high valuation and replacement costs due to specialised infrastructure. 
• Physical cyber risks: Hardware failures, cyberattacks, or software issues that cause outages, data loss, or security breaches and lead to operational disruptions and legal liabilities; the pace of technological change that outdates equipment quickly (such as liquid cooling); and changes in asset valuation and replacement strategies.
• Energy risks: Dependence on reliable power and cooling systems; network connectivity disruptions; and electricity supply fluctuations impacting operational stability.

Risk management strategies for a new, modern asset class

The physical and digital asset risk profile of data centres is a complex blend of real estate, energy, infrastructure, and advanced technology exposures.

From a risk and insurance perspective, this necessitates comprehensive, multi-layered coverage strategies, detailed risk assessments, and proactive resilience measures. Effectively managing these diverse and interconnected risks is important to safeguard this rapidly evolving and strategically vital asset class.

Amid the surge in global data centre projects, Marsh is pleased to announce the Marsh Data Centre Insurance and Risk Management Services. We support a wide range of sectors and business models involved in data centres, including diverse operating models and industries that heavily invest in this infrastructure, such as real estate, technology, and financial services organisations.