Over Half of New US Data Centers Face High Natural Disaster Risk
New research by Gallagher reveals that 56% of new US data centers, representing $800 billion in investment, are planned for areas highly prone to natural disasters. This geographic concentration puts critical streaming infrastructure at risk of physical damage and operational downtime. Insurers are demanding higher premiums or stricter requirements for new builds in these vulnerable zones.
Key Takeaways
- 56% of new US data centers, an $800 billion investment, are slated for high natural disaster risk zones.
- Gallagher's analysis highlights locations with significant seismic, flood, or hurricane risk.
- Developer priorities like energy grids and connectivity often conflict with climate resilience data, leading to risk concentration.
- Insurers are increasing premiums and hardening requirements for data centers in states like California, Florida, and the Texas Gulf Coast.
- The report advocates for integrating comprehensive climate modeling earlier in data center site selection.
Why It Matters
The concentration of new data center infrastructure in climate-vulnerable regions poses an immediate threat to the operational stability of streaming services and other digital industries. Increased insurance costs and potential service disruptions will likely be absorbed by end-users or force a re-evaluation of current buildout strategies. Stakeholders should monitor how these rising risks translate into higher infrastructure costs and whether regulatory bodies or industry standards emerge to mandate more resilient site selection practices.
Additional Context
The trend of building data centers in high-risk areas is a growing concern for insurers and investors alike. Swiss Re's 'Insuring AI: Data Centre Value Accumulation Risks' report (July 2026) highlights that over a quarter of US data center capacity may be in locations experiencing three or more large-hail days annually, and approximately 40% are in significant-to-very-high tornado-day zones. This report also notes that clustering multiple data centers in close proximity, such as in Abilene, Texas, and Virginia, amplifies the potential for massive insured losses from a single natural catastrophe. Further, The Actuary (June 2026) specifies that $670 billion of planned US data centers face major storm risks, with 27% (worth $440 billion) exposed to winter storms and 21% (worth $340 billion) to hurricanes. Data Center Knowledge (February 2026) has detailed how operators are adapting by adopting smarter site selection, resilient design, and diversified energy sources. The outlet cites examples like Texas facilities avoiding floods by being on higher ground and data centers switching to on-site generation during Winter Storm Fern in early 2026. The IIGCC (February 2026) also raised concerns for investors regarding climate and nature risks, noting that two-thirds of US data centers built or under construction since 2022 are in areas of high water stress, with annual water use by US data centers expected to at least double by 2028.
Read full article at techradar.com
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