Jupiter Intelligence

Jupiter Report

Risk in the Racks

Physical climate risk across the global data-center footprint, and what it means for investors, lenders and insurers

Most climate damage at data centers hits the equipment inside, not the building, and most of it is uninsured. The hub concentration and insurance terms that drive the credit risk rarely show up in how data-center securitizations are rated.

This report estimates the dollar loss at each of 14,073 operating data centers in 187 countries and follows it to the owners, tenants, insurers and lenders who would bear it.

By Wahib Ghazni, PhD, Head of Economic & Financial Modeling, Jupiter Intelligence

$4.4bn
expected loss a year from flood, wind and wildfire, half of it at 141 sites
61%
of that loss is damage to the IT equipment inside
70–82%
estimated share of expected loss that is uninsured
$6bn+
the costliest single site’s 100-year loss, above typical policy limits

What you’ll learn

  • The risk is in the racks.Damage to servers, storage and GPUs accounts for 61% of expected loss. At colocation facilities that equipment belongs to tenants, not the landlord whose building is insured, rated and securitized, and tenants’ 1-in-100-year loss, $5.8 billion, is three times their landlords’.
  • Who pays: most of the loss is uninsured.An estimated 70–82% of expected loss, or $3.1–3.6 billion a year, is uninsured, and the gap is widest where the loss is largest. The costliest single site’s 100-year loss tops $6 billion, above typical policy limits.
  • Who lends: concentration and insurance terms drive credit risk.Pools spread across many markets hold up. Uninsured single-market pools in Shanghai, São Paulo and Hong Kong breach their cash-trap triggers in about 4–6% of years today, yet hub concentration, insurance terms and flood design rarely appear in rating methodologies or presale reports.
  • Who fixes it: elevation works, but landlords keep only a fifth of the gain.Raising the lowest floor to the 100-year flood level cuts total expected loss by 23%, but at third-party facilities the landlord who pays keeps only 22% of the benefit.

What matters for lenders, insurers and investors is where the risk sits, who carries it and when it arrives.

Expected loss covers flood, wind and wildfire. Convective storms, hail and grid failures are outside the model, so the totals are a lower bound.

Download Risk in the Racks for the credit and securitization stress tests, hub-by-hub results and how the analysis works.

Who it’s for

Investors and owners
Which hubs and types of site carry the loss, and what it does to value.
Lenders and ABS investors
Model-implied rating changes for listed operators, and cash-trap breach rates by hub.
Insurers and reinsurers
Where hub-level tails sit, and how deductibles change outcomes.
Operators and tenants
Who bears the loss, and who gains from building resilience in.
Rating agencies and supervisors
Which variables matter for credit, and what to disclose.

See the same analysis on your portfolio

ClimateScore™ Global supplies site-level flood, wind, wildfire, heat, drought and water-stress metrics for any set of locations. Jupiter can apply the approach in this report to your facilities, leases, loans or pools.

Download the report