Effective facility operations are emerging as a critical factor in reducing insurance losses at data centers, as the scale and complexity of these facilities continue to grow.
Speaking at Data Center World in Washington, D.C., Alistair Blundy, CEO of ATA Insurance, said facility managers play a central role in mitigating risks tied to increasingly valuable and complex digital infrastructure.
Data centers now house massive concentrations of high-value equipment, particularly graphics processing units (GPUs) that power artificial intelligence workloads. According to Blundy, a single facility the size of a football field can contain an average of $13.6 billion in GPUs — far exceeding traditional insurable assets.
“So we’re an order of magnitude above” other exposures, Blundy said. “We’re just not used to having that much insured equipment on one site.”
The data center sector presents unique challenges for insurers due to its overlap across multiple risk categories. Traditional insurance models — which separate coverage into property, equipment and energy — are increasingly inadequate for these facilities.
“The conventional way of approaching specialty insurance is in siloed lines of business where underwriters understand the coverage they’re providing,” Blundy said. “Data centers are too complex for that.”
In addition to property risks, insurers must account for threats to computing equipment, energy systems, intellectual property, workforce safety and environmental factors. These overlapping exposures have led insurers to develop more comprehensive, customized policies tailored specifically to data center operations.
Recent global incidents have underscored these risks. Blundy pointed to attacks on data centers in the Middle East that disrupted roughly 100 cloud services, illustrating the potential scale of impact when failures occur.
Despite the complexity, relatively small operational improvements can significantly reduce risk exposure, particularly in areas such as battery maintenance, water management and cooling systems.
Battery systems, especially aging lithium backup units, pose a growing fire risk if not properly maintained. “Lithium batteries [are getting] a bit older now,” Blundy said. “Some of them are 10 years old at sites. There is a risk they just sat there and weren’t maintained properly,” increasing the chance of fire — the most significant property risk for insurers.
Water leaks represent another major vulnerability. In one U.K. incident, a minor leak led to water entering an electrical room, triggering a 24-hour shutdown and impacting multiple tenants across Europe.
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“The key takeaway is the interdependency of where one failure area can quickly impact others,” Blundy said.
Advanced monitoring technologies, including automated and AI-assisted leak detection systems, are becoming more widely adopted to address these risks.
Cooling infrastructure also remains a critical concern. Extreme weather events, such as a 2022 U.K. heatwave exceeding 40°C (104°F), have demonstrated how sustained high temperatures can overwhelm even redundant systems, leading to cascading failures.
To further mitigate risks, insurers are increasingly offering “risk bursaries” — funds built into insurance policies that allow operators to invest in targeted improvements. These grants can be used to hire risk engineers or implement upgrades that enhance facility resilience.
“Risk bursaries [are] not well known but work well,” Blundy said, noting that they benefit both insurers and operators by proactively reducing exposure.
As data center investments continue to surge globally, the role of facility management in safeguarding these high-value assets is becoming more critical. For construction and operations professionals, integrating risk-aware design and maintenance strategies will be essential to ensuring long-term performance and insurability.
Originally reported by Robert Freedman, Lead Editor in Facilities Dive.
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