Zurich Flags the Six Risks Affecting Data Centre Builds

As global demand for data centres heightens, a new report from Zurich North America highlights how risk management is being reshaped by scale and complexity across the sector.

The report draws on insights from Zurich’s risk engineers, underwriters, claims professionals and business leaders.

It examines how risks are evolving across construction and early operations as projects grow in size and ambition.

“As AI adoption drives demand for data centres, project values, power demand and execution complexity are all intensifying at once,” says Kelly Kinzer, President and Global Head of Construction and Surety for Zurich.

“The ability to navigate the challenges and build in resilience is critical not just in the US, which hosts the largest share of global data centre capacity.

“Many countries see data centre expansion within their borders as critical to economic competitiveness and digital sovereignty.”

Managing risk across the lifecycle

One of the core themes of the report is the need for coordinated risk management across the full lifecycle of a data centre, from design through to early-stage operations.

As construction and live operations are increasingly overlapping, traditional approaches to risk segmentation are becoming less effective.

“The market has a strong appetite to support the data centre sector,” said Heather Fox, President of U.S. National Accounts.

“But with construction, commissioning and operations overlapping more than ever, risk decisions must be coordinated across teams and time horizons.

“This is true for builders and owners, who want to avoid coverage gaps, as well as for insurers and reinsurers, who need to manage concentrations of risk and resilience across different portfolios.”

Scaling introduces new loss drivers

Zurich’s findings also highlight how the rapid scaling of data centre campuses is introducing new categories of risk.

Larger facilities, increased power requirements and higher equipment density are amplifying the impact of potential incidents.

“What might in the past have been a contained event can have exponential impact on projects being built under intense time pressure with enormous equipment values,” said Tobias Cushing, Head of U.S. Construction at Zurich.

“Getting coverage, structure and execution right upfront has become essential as sites move into the multibillion-dollar, multimillion-square-foot range with thousands of megawatts of power. We're even seeing gigawatt campuses.”

According to the report, Zurich has insured more than 500 data centre projects globally over the past five years, representing over US$350bn in project values.

This experience underpins its assessment of emerging loss drivers, including weather-related events and risks associated with hot works like welding.

Expanding geographies, rising exposure

As data centre development moves beyond traditional hubs, exposure to environmental risks is increasing.

The report identifies severe convective storms, including hail and tornadoes, as a growing concern in regions seeing rapid expansion.

This geographic diversification also raises the importance of redundancy and resilience strategies. With workloads distributed across multiple sites, operators must ensure that outages in one location do not cascade into wider service disruption.

Business interruption remains a key financial risk, with losses escalating quickly when downtime affects hyperscale or enterprise workloads.

Interconnected risks demand integrated thinking

Zurich’s analysis points to the interconnected nature of modern data centre risks, where decisions made at one stage can have cascading effects across the project lifecycle.

“What makes data centres uniquely challenging is not any single risk, but how quickly risks intersect and compound across design, construction and early operation,” said Arooran Sivasubramaniam, U.S. Head of Zurich Resilience Solutions.

“Zurich Resilience Solutions risk engineers bring a broad, integrated perspective, connecting what we see in design decisions, on active sites and in loss experience, to help customers anticipate how decisions made today can shape resilience tomorrow.”

Industry pressures extend beyond construction

The report also acknowledges wider pressures linked to the rapid expansion of data centre capacity.

Labour shortages, energy availability and strain on water and power infrastructure are all influencing project feasibility and long-term operations.

“These are immediate challenges that our customers and prospects are grappling with in the U.S., and similar challenges are emerging around the world as data centre expansion continues,” said Patrick McBride, Head of International Construction for Zurich.

“By sharing experience and insights, we can help drive innovative solutions.”