Why Data Centers Matter to the U.S. Economy and How CEOs Are Managing the Risk

Twenty years ago, a data center was a room with some servers in it. Today, data centers are the physical backbone of the global economy. Every financial transaction, every AI query, every cloud-hosted business application, every telemedicine visit, every autonomous vehicle decision — all of it flows through data center infrastructure. When these facilities fail, businesses don’t slow down. They stop.

The economic importance of data centers has outpaced the insurance industry’s ability to adequately protect them. Allianz Commercial research projects nearly $7 trillion in global data center construction spending by 2030, with the major cloud providers — Amazon, Microsoft, and Google — collectively investing hundreds of billions annually in AI infrastructure. For CEOs managing enterprise operations that depend on this infrastructure, the question isn’t whether data centers matter. It’s whether your insurance program acknowledges how much.

• Amazon Web Services, Microsoft, and Google Cloud accounted for 63% of global cloud services revenue in Q2 2025, concentrating enterprise operational dependency on a handful of infrastructure providers
• Amazon planned approximately $100 billion in data center capital expenditure for 2025, Alphabet roughly $75 billion, and Meta approximately $65 billion — most directed toward AI infrastructure
• The federal government’s designation of data centers as Critical Digital Infrastructure creates regulatory compliance obligations for operators and downstream liability considerations for enterprise tenants
• An estimated $2.7 trillion will be spent on new data infrastructure in the U.S. through 2030, and a single facility can represent up to $700 million in insurable coverage
• Our licensed advisors help enterprise CEOs and CFOs evaluate their organization’s data center dependency exposure and structure insurance programs that address both owned infrastructure and third-party provider risk

Why CEOs Can No Longer Delegate Data Center Risk

The Board-Level Conversation

Data center risk has moved from the IT department’s worry list to the boardroom. When a single cloud provider outage can halt your revenue-generating operations for hours or days, the financial exposure belongs on the CEO’s risk register — right alongside cyber liability, regulatory compliance, and natural catastrophe. Boards of directors at enterprise companies are increasingly asking their management teams to quantify data center dependency and verify that insurance programs respond when that dependency fails.

We’ve sat in rooms with CFOs managing $50 million insurance programs who couldn’t answer a basic question: what happens to your coverage when your AWS region goes offline? The answer, in most cases, is nothing. Their business interruption policy requires physical damage to their own premises. Their technology E&O policy covers errors in their own product delivery. Neither policy contemplates a scenario where revenue stops because a data center they don’t own experienced a physical loss. For more details, see our guide on whether you need gap insurance if you already have full coverage.

• Board risk committee inquiries about cloud and data center dependency have increased significantly over the past two years, driven by high-profile outage incidents affecting enterprise operations
• SEC climate disclosure requirements increasingly intersect with data center energy consumption, creating regulatory compliance obligations for companies operating or heavily dependent on data center infrastructure
• Fiduciary duty considerations arise when directors and officers fail to address known operational dependencies — D&O policies should be reviewed for data center-related governance exposure
• Enterprise risk management frameworks now include “digital infrastructure dependency” as a distinct risk category requiring quantification, monitoring, and transfer
• We help enterprise leadership teams translate data center dependency into quantifiable insurance exposure and structure coverage programs that boards can verify protect shareholder value

Supply Chain and Operational Dependency

Your data center risk extends far beyond your own servers or your cloud provider’s uptime guarantee. The supply chain feeding data center infrastructure — semiconductor manufacturers, specialized equipment vendors, power infrastructure suppliers, construction firms — creates dependency chains that can disrupt your operations even when your specific provider is functioning normally. A global GPU shortage doesn’t crash your data center. But it prevents your cloud provider from expanding capacity to meet your growth, delays your AI initiatives, and drives up the cost of computing resources you’ve budgeted for.

CEOs managing enterprise operations need insurance programs that contemplate this broader supply chain exposure. For companies operating in the Houston energy sector where data center demand is reshaping local infrastructure, the supply chain implications are especially acute.

• Transformer lead times exceeding two years are bottlenecking data center construction, creating delayed completion exposure for developers and capacity constraint risk for enterprise tenants
• GPU supply constraints affect cloud computing costs and availability, creating indirect financial exposure for enterprise customers budgeting for AI and computing resources
• Construction labor shortages in data center markets drive up project costs and extend timelines, increasing builders risk premiums and delayed start-up insurance requirements
• Cooling equipment supply chain disruptions — particularly for specialized liquid cooling systems — can delay facility commissioning and leave completed buildings unable to operate at designed capacity
• Our advisors help CEOs understand how data center supply chain risks translate into their own organization’s insurance exposure and identify coverage solutions for both direct and contingent losses

Case Study: When Cascade Health Systems Lost Its Cloud Provider for 72 Hours

Cascade Health Systems (name changed for confidentiality) is a multi-state healthcare network with $180 million in annual revenue, 2,400 employees, and 14 clinic locations across Texas and Louisiana. Their entire electronic health records (EHR) system, telehealth platform, patient scheduling, and billing operations ran on a single cloud provider’s infrastructure. When that provider’s primary data center experienced a catastrophic cooling failure in July 2025, Cascade went dark for 72 hours.

The CEO’s immediate problem was patient safety. The longer-term problem was financial — and it exposed exactly the kind of insurance gaps that data center dependency creates for enterprises that don’t own or operate the underlying infrastructure.

• 72 hours of EHR downtime affected 14 clinic locations, forcing reversion to paper-based patient records and cancellation of 3,200 scheduled appointments across the network
• Revenue impact totaled $4.3 million: $2.1 million in cancelled appointments, $890,000 in emergency IT response and temporary systems, $680,000 in overtime and manual processing, and $630,000 in regulatory compliance costs related to patient data accessibility requirements
• Their cloud provider’s SLA capped liability at service credits equal to three months of fees — approximately $180,000 — leaving $4.1 million in losses without a contractual recovery path
• Cascade’s existing business interruption policy required physical damage to their own premises and explicitly excluded “interruption of utility or telecommunications services” — the cloud provider’s cooling failure triggered neither
• After engaging our team, we placed contingent business interruption with service interruption extensions covering cloud provider infrastructure failures, technology E&O covering patient data accessibility compliance, and negotiated enhanced SLA terms with their new multi-provider cloud architecture — total annual premium for the enhanced program: $127,000 against $4.3 million in demonstrated exposure

The Regulatory Landscape Is Shifting

The federal government’s June 2025 designation of hyperscale data centers as “Critical Digital Infrastructure” changed the regulatory equation for everyone in the data center ecosystem. This designation unlocked expedited permitting for data center projects and eligibility for federal risk-sharing programs. But it also created compliance obligations for operators and downstream regulatory exposure for enterprise tenants that most insurance programs don’t address.

The July 2025 White House executive order on Accelerating Federal Permitting of Data Center Infrastructure, as detailed by Morgan Lewis, directed federal agencies to facilitate faster development while the Department of Energy began soliciting bids for data centers on federal land. These policy shifts create new liability frameworks that enterprise insurance programs need to contemplate.

• Critical infrastructure designation creates security and resilience requirements for operators that may flow through to enterprise tenants via contractual obligations
• Environmental regulations governing data center energy consumption, water usage, and emissions are expanding at both federal and state levels — creating compliance exposure for operators and potentially for major tenants
• HIPAA, PCI-DSS, SOX, and state privacy regulations impose data handling requirements that create shared liability between data center operators and their enterprise customers
• The European Union’s Energy Efficiency Directive mandates performance reporting and energy management system implementation — affecting U.S. companies operating global data center infrastructure
• We help enterprise clients navigate the evolving regulatory landscape and ensure their insurance programs address compliance risk arising from data center operations and dependencies — for construction-specific regulatory considerations, see our Texas Data Center Boom Insurance Guide

Case Study: How Redline Manufacturing Group Used Insurance Strategy as a Competitive Advantage

Redline Manufacturing Group (name changed for confidentiality) is a Houston-based industrial automation company with $120 million in annual revenue and 680 employees. Their CEO was competing for a $35 million contract with a major petrochemical company that required all vendors to demonstrate business continuity capabilities for technology-dependent operations. Three competitors bid on the same contract. Two couldn’t demonstrate adequate insurance coverage for cloud infrastructure failure. Redline could — because they’d built it proactively.

What started as an insurance conversation became a competitive differentiator that won a contract worth 30% of their annual revenue.

• The RFP required vendors to demonstrate contingent business interruption coverage addressing third-party cloud and data center failures — a requirement that eliminated two of four qualified bidders who couldn’t produce certificates of insurance meeting the specification
• Redline’s insurance program included $10 million in contingent BI with 8-hour waiting period, technology E&O with $5 million limits covering downstream customer losses, and cyber liability with data center-specific endorsements
• Total incremental cost of the data center-responsive insurance enhancements: $89,000 annually — against a contract worth $35 million over three years
• The petrochemical company’s risk management team specifically cited Redline’s insurance program as a differentiating factor, noting that technology dependency risk management was a procurement evaluation criterion for all vendors moving forward
• We’ve since structured similar programs for six additional Houston-area manufacturers competing for enterprise contracts that require demonstrated technology infrastructure resilience — insurance as a competitive weapon, not just a cost center