Data Center Risks: Managing the Risks Behind Every Click

Think of a data center as a digital city that never sleeps.

Its cables, servers, batteries, cooling systems, and backup generators power the websites, cloud storage, videos, games, hospitals, banks, and AI tools we rely on.

In a new white paper, From Traditional to AI Data Centers: Emerging Risk Exposures and Best Practices for Risk Managers, AXA XL property risk engineers highlight data centers’ critical role and key risks. Even minor failures can cause costly outages, with business interruption losses sometimes exceeding equipment repair costs.

Data Center Types and Risks

Traditional data centers use CPUs for everyday computing, while AI centers use specialized chips such as GPUs. AI systems require far more power, storage, network capacity, and cooling.

Data centers include hyperscale facilities owned by major technology companies; colocation centers that rent space, power, and cooling; edge centers located near users for faster data processing; and modular centers built quickly from prefabricated sections.

One major concern is weather and natural disasters. Data centers can be damaged by windstorms, floods, earthquakes, wildfires, and even smoke from nearby fires. Buildings need strong roofs, safe locations, earthquake protection, and materials that do not easily burn. The paper also points out risks from terrorism, civil unrest, and events that reduce the available workforce.

Infrastructure and Fire Safety

Heat is one of the biggest enemies of computer equipment. Permanent damage can start at temperatures as low as 125 degrees Fahrenheit. AI equipment creates even more heat, so cooling systems are especially important. Data centers may use air conditioners, outside air, heat exchangers, liquid cooling, or even liquid immersion, where computer parts are placed in special cooling fluid. These systems need backups, regular testing, and leak alarms.

Electricity is another critical area. Data centers often use multiple utility feeds, generators, batteries, transfer switches, and uninterruptible power supplies, also called UPS systems. These backups keep servers running if normal power fails. But more equipment also means more chances for something to break, so staff must have clear procedures and spare parts available.

Lithium-ion batteries are useful because they are compact and powerful, but they can catch fire or release dangerous gases if damaged. They should be stored carefully, protected by sprinklers, and removed from the building if damaged.

Fire protection is essential. The paper recommends automatic fire protection, early smoke detection, trained staff, secure access controls, cameras, and water leak sensors. Data halls should be separated from risky areas, such as boiler rooms or spaces containing hazardous materials.

Building Resilience

AXA XL’s white paper reminds risk managers that planning for downtime matters as much as preventing physical damage. Companies should think about supply chain delays, cyberattacks, missing computer chips, skilled worker shortages, and how customers will be affected if systems go offline.

Data centers are the engine rooms of our digital world. Keeping them safe takes smart design, strong backups, careful maintenance, and people who are ready to act fast when trouble appears.

Read the whitepaper HERE.