Article

Data centres: Mitigating risks during times of conflict

Discover the risk interdependencies for data centre developers and operators during times of conflict.

Data centres are typically built to withstand multiple threats. Strong physical security, redundancy, backup systems, and strict operational controls help them remain resilient in the face of a wide range of risks. But the construction of a data centre depends heavily on factors that are often beyond the owner’s immediate control, including a stable energy supply, functioning transport routes, dependable contractors, specialist equipment, and robust insurance programs that respond as expected.

These dependencies can quickly come under strain during periods of conflict, which, in today’s highly interconnected world, is no longer a distant concern to be monitored from the sidelines; it is increasingly affecting projects and operations in practical, commercially significant ways.

Beyond asset disruption

Conflict risk is rarely limited to direct physical damage. A data centre does not need to come under immediate attack to suffer material disruption. For example, projects may be delayed when global supply chains are disrupted because a critical supplier is affected by a conflict, port congestion, or sanctions. For projects closer to a conflict zone, contractors may need to scale back their on-site workforce due to safety concerns or transportation challenges.

When dependencies surrounding the asset disrupt the data centre build-out, a main question revolves around who bears the resulting cost.

Conflict-related disruptions may have important implications for both facilities under construction and operational sites. For developers, conflict can quickly change the contractual position on a live project. Engineering, procurement, and construction contracts are coming under greater pressure as contractors seek broader protection against conflict-related disruption and supply chain volatility. Owners may find more risk being passed back to them through carve-outs, widened force majeure clauses, or qualified delivery obligations. Even a short interruption can lead to extended disagreements over project delays, cost escalation, and who bears responsibility for remobilisation.

Revisiting contractual risk allocation

This reality underscores the importance of early contract reviews to determine whether these agreements reflect changing risks, identify who is responsible for risks related to delays or disruptions, and clarify which events are covered by force majeure. Wording that may once have been adequate for isolated incidents may be less effective when disruption is prolonged, cross-border, and indirect.

Lenders are also paying closer attention. What may once have been treated as routine diligence is now more likely to involve a deeper examination of resilience, utility dependencies, insurance adequacy, and procurement practices.

Protecting critical equipment in transit

Marine cargo exposure is another area that warrants closer scrutiny. Data centre projects depend on globally sourced, high-value components, often moving through strategically sensitive regions. Even when cargo itself is not damaged, disruption to shipping lanes or sudden changes in underwriting appetite can affect cost, timing, and certainty of cover. That can result in delayed delivery, rerouting, storage complications, or reduced flexibility leading to a project falling behind schedule.

This matters because many critical data centre components are not easily substituted. Transformers, switchgear, cooling equipment, UPS units, and specialist electronics have long lead times even in stable conditions. During a conflict, those lead times can stretch further, with knock-on effects across commissioning schedules and revenue expectations. A single delayed component can prevent energisation, testing, or handover of an entire phase.

Owners and developers should therefore look beyond simple shipment tracking and consider a wider cargo resilience strategy. That requires understanding transit routes, alternative ports, local storage options, and the practical implications of rapid changes in war risk terms or cancellation notice periods. It also means being aware and prepared for the possibility of sanctions on regions where critical suppliers issued at short notice, especially where their goods are either manufactured or move through, or near, highly sensitive jurisdictions.

Supply chain risk often sits below the surface

Supply chain visibility remains important, but this strategy is often not fully developed. Many organisations have a reasonable view of their direct suppliers but a limited understanding of the deeper tiers below them. That can leave hidden concentrations unaddressed. A supplier may appear diversified on paper, but further investigation uncovers that their downstream suppliers are all concentrated in a geography exposed to political or physical disruption.

For data centres, this challenge is especially pronounced because so many critical inputs are globally concentrated. For example, data from Marsh’s AI-powered supply chain platform, Sentrisk, found that 99% of all suppliers that could pose a bottleneck to global data centre supply chains are based in Asia, where 67% of locations considered to be concentration risks are also based. Sentrisk data also found that Asia-based suppliers that are highly exposed to natural hazards make up approximately 20% of the global supply chain.

More broadly, Sentrisk analysis shows how quickly supply chain complexity expands beyond the first tier: in one construction sector analysis, 164 Tier 1 sites expanded to a mapped network of 25,558 sites across Tier 2 and Tier 3 suppliers, spanning 77 countries, with 97% of the mapped network sitting at Tier 3, often below the line of visibility. This means that risks often sit far deeper in the supply chain than organisations can see through standard supplier due diligence alone.

Components linked to power, cooling, and advanced computing often depend on specialist manufacturing ecosystems and scarce materials. If a tier two or tier three supplier is impacted, the consequences can be increased prices and, in worst cases, substantial delays.

That is why risk mapping should go beyond the first tier of suppliers. Owners and developers should seek to identify where critical items originate, which routes they travel, what alternatives exist and how long recovery would realistically take if a key supplier went offline. This exercise can support better procurement planning, more informed contract negotiations, stronger lender discussions and more targeted insurance decisions. Marsh’s Sentrisk combines advanced analytics with supply chain mapping to provide organisations with deeper visibility into their supply chains, uncovering exposures that sit beyond first-tier suppliers.

Cyber risk can rise alongside geopolitical tension

Periods of geopolitical tension may result in elevated cyber threat activity. Data centres often carry both symbolic and operational significance, which may make them attractive targets during a conflict. Physical hardening alone is not enough if wider instability increases the likelihood of cyber disruption affecting operations, supply chains, or supporting infrastructure.

Reassessing insurance strategy

Traditional coverage may not always respond to losses arising from war, terrorism, political violence, civil unrest, or trade disruption. Over time, specialist political violence markets have developed to address these perils more clearly, and broader cover can be important where there may otherwise be uncertainty over how an event is classified. That distinction can make the difference between a recoverable loss and a coverage gap.

In parallel, trade disruption solutions may help address losses that do not depend on physical damage at the insured site. This can be especially relevant in situations where the real financial impact arises from the interrupted movement of goods, closure of transport corridors, or sudden inaccessibility of key infrastructure. Bottlenecks in procurement or logistics and other delay contributors can create substantial downstream costs for data centre owners and developers, which makes specialist coverage worth considering.

Taking a wider view of resilience

Data centres are now considered a front-line asset. Conflict risk can materially impact how these assets are financed, built, and operated. A robust response starts with a realistic view of dependency: on contractors, on shipping routes, on utilities, on specialist equipment, on contracts, and on policy wordings. Organisations that understand those dependencies in detail will be better placed to absorb disruption, allocate risk more effectively, and make more confident decisions in an increasingly uncertain environment.

For more information and for help in better understanding the potential impact of conflicts on your organisation, contact your Marsh representative.

_{The information contained herein is based on sources we believe reliable and should be understood to be general risk management and insurance information only. The information is not intended to be taken as advice with respect to any individual situation and cannot be relied upon as such.}

_{This publication also contains third party content and/or links to third party websites. Links to third party websites are provided as a convenience only. Marsh is not responsible or liable for any third-party content or any third-party website nor does it imply a recommendation or endorsement of such content, websites or services offered by third parties.}

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Article

Data centres: Mitigating risks during times of conflict

Beyond asset disruption

Revisiting contractual risk allocation

Protecting critical equipment in transit

Supply chain risk often sits below the surface

Cyber risk can rise alongside geopolitical tension

Reassessing insurance strategy

Taking a wider view of resilience

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