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As Europeans scramble to stay cool amid a record-breaking heatwave, Big Tech faces its own battle to keep the powerful chips in AI data centers running. Temperatures this week have underscored the impact the weather can have on infrastructure like factories, nuclear power plants and data centers. Extra demand from air conditioning units can overload power grids, causing blackouts that can disrupt infrastructure. And it's not just in Europe. Over the past three years, severe weather has become the leading cause of loss in Zurich 's U.S. data center builders' risk portfolio. It now drives a third of the company's losses, Zurich's Head of International Construction Patrick McBride, told CNBC.
Severe weather is no longer something that can be treated as a background exposure. Patrick McBride Head of International Construction at Zurich
Many data centers are moving to suburban or rural areas where land is cheaper and records of extreme weather were often limited because the areas were largely underdeveloped, he said. "Now we have $3 billion worth of assets with over a mile worth of exposure to these events."
Why insurers are watching climate risk
A recent study by climate risk analytics firm First Street found that 79% of global data center capacity faces elevated risks from acute climate hazards such as flooding, extreme winds, and wildfires that can disrupt operations, increase downtime and drive insurance and repair costs.
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