Power grid strain, construction risk and cyber exposure are key threats for APAC's data centre boom

Asia Pacific’s (APAC) data centre expansion is creating concentrated risks across construction, power, operations and cyber, according to new research from Howden, the global insurance broker.

Howden’s latest report, “Insuring the data centre supercycle: Six critical areas of interconnected risk, from construction to conflict”, examines the emerging risks from one of the most transformational industrial revolution in modern history. The research shows that data centres face a wide range of interconnected risks, with downtime being a significant business exposure. Against APAC’s unique and complex risk landscape, insuring the region’s rapidly expanding data centre sector is becoming increasingly challenging.

Data centre construction boom concentrates risk at fewer, larger sites

According to Howden analysis of data collected from 451 Research by S&P Global, the APAC region constructed approximately 66 million square feet of new data centre building space in 2025 alone. Construction volumes grew at a compound annual growth rate (CAGR) of 18% between 2016 and 2025, with 4.5 times more square footage added in 2025 than in 2016. The average size of a new data centre rose from approximately 141,000 square feet in 2016 to 236,000 square feet in 2025, concentrating greater asset values at individual sites.

As shown below, in 2025 APAC’s 66 million square feet of data centre construction was broadly on par with the US and Canada and well ahead of EMEA (17 million) and LATAM (4 million). In addition, the APAC region recorded strong CAGR in data centre construction of 18% from 2016 to 2025. This is comparable to the rate of growth recorded in the US and Canada, which was 21%, but above the 11% recorded in EMEA.
 

Expansion of data centres is not limited to building new facilities. Between 2026 and 2031, planned expansion at existing data centres is equivalent to 72% of their current footprint¹.  Construction taking place alongside the operation of high-value, sensitive data centre computing can increase the risk of physical damage and business interruption. As a result, insurers and brokers are increasingly providing integrated insurance programmes that address the distinct risk profiles of both the construction and operational phases at the same time.

Power demand puts APAC grids under strain

Growing power consumption from data centres is putting electricity grids across the region under strain. Between 2016 and 2025, power consumed by data centres built across APAC increased at a 47% CAGR, representing a 32-fold rise over the period.²  

To keep up with demand, a growing number of new hyperscale campuses are being designed to generate their own power on-site, rather than drawing it entirely from the public electricity grid. This shift introduces a changing set of power and operational exposures for insurers and reinsurers to assess as part of the overall risk profile of data centre developments. 

Outages and cyber risk persist despite near-universal redundancy

More than 98% of APAC data centres have redundant capacity embedded in their systems.³  However, outages still occur and are often caused by system failures that do not involve physical damage. This presents a challenge for traditional insurance solutions that rely on physical damage as a trigger. The market is developing solutions such as parametric cover, particularly for retail and wholesale providers, who account for about 75% of APAC’s data centres and carry uptime commitments to multiple customers. ⁴

These facilities also face the risk of cyber exposure. Within APAC, retail data centres carry the greatest exposure as they host the workload of multiple tenant organisations, increasing the attack surface, while interconnected tenants increase the risk of lateral movement. Cyber risk therefore needs to be considered alongside property, power and operational exposures.

Conflict risks expose gaps in insurance coverage

Howden’s analysis also shows a growing volume of APAC data centre building space located within 10 to 15 kilometres of active conflict zones, with spikes recorded in 2020 in Pakistan and the Philippines and in 2022 in Myanmar, Pakistan and the Philippines.⁵  

A key challenge is the concentration of risk inherent in shared data centre infrastructure, where a single incident can potentially disrupt hundreds of customers at once. Conflict-linked or state-sponsored attacks that damage power, cooling or control systems may also expose potential gaps between cyber, property and war coverage, depending on policy wording.

Clear and coordinated policy wording across all three areas, supported by rigorous assessment of cyber and physical risks, may help to address these potential gaps.

For data centre operators and investors, the practical stakes are significant. Those who build risk management and resilience into site selection and design from the outset are better placed to secure coverage on favourable terms, as insurance capacity continues to flow into the sector.

Zoe Zhang, Regional Director, Digital Infrastructure Practice, Asia, Howden, said: “The scale and pace of data centre development across Asia Pacific is creating an increasingly complex risk environment. As sites grow larger and demand more power, operators and investors need to consider how construction, operational, cyber and other exposures interact and assess how best to protect against potential risks and losses.

“Data centre operators and investors across the region may benefit from specialist advice and tailored risk transfer solutions to match the pace of this exponential growth. An integrated approach – combining rigorous risk assessment with proprietary data – can support operators in strengthening resilience while securing the insurance coverage that is critical to ensuring seamless expansion.”

¹Howden analysis of 451 Research by S&P Global
²Howden analysis of 451 Research by S&P Global 
³Howden analysis of 451 Research by S&P Global
⁴Howden analysis of 451 Research by S&P Global
⁵Howden analysis of UCDP and 451 Research by S&P Global