Having previously explored resilience in the context of critical minerals, this article turns to another critical enabler of the modern economy: data centres.

  • Climate risk is becoming a business continuity and economic resilience issue.
  • Data centre outages commonly exceed US$100k, with major events exceeding US$1m.
  • Heat, water scarcity and infrastructure failures are emerging as the most material climate threats.
  • Climate risk assessments and scenario analysis provide a strategic framework for resilience planning.
  • As climate volatility intensifies, digital infrastructure leaders must reassess whether their assets, operations and investment strategies remain fit for a more uncertain future. 

The invisible infrastructure behind every business 

Data centres sit at the heart of Australia’s digital economy. As AI, cloud computing and digital technologies accelerate, resilient digital infrastructure has become fundamental to business operations. Australia’s data sovereignty requirements mean much of this infrastructure is located domestically, elevating data centres from technology assets to nationally significant infrastructure. Demand for capacity is growing rapidly while climate-related disruptions are becoming more frequent and severe. This convergence creates a strategic challenge: how can organisations ensure reliable digital infrastructure in an increasingly volatile climate?

Climate change is reshaping digital infrastructure risk

Climate change is fundamentally altering the operating environment for digital infrastructure. Extreme heat is placing growing pressure on cooling systems as AI drives higher computing densities. Water scarcity is creating growing uncertainty around long-term cooling requirements. Flooding, cyclones and extreme rainfall threaten not only facilities, but also the electricity, telecommunications and water networks upon which they depend. The challenge for Australia is that future infrastructure must remain operational, insurable and economically viable under increasingly severe climate conditions. 

When data centres fail, entire economies feel it 

The consequences of disruption are growing rapidly. Industry research indicates more than half of significant outages cost over US$100,000, while one in five exceeds US$1 million. Beyond direct losses, outages can cascade across financial services, healthcare, transport, telecommunications and supply chains. The greatest risk is often not physical damage, but systemic disruption affecting every organisation connected to critical digital infrastructure. As dependence on AI and digital services grows, resilience is becoming a matter of economic competitiveness as much as operational continuity.

Five priorities for building climate-resilient digital infrastructure 

  1. Design for future climate conditions, not historical performance: Data centres are long-life assets whose resilience, insurability and operational performance will increasingly depend on future climate conditions rather than historical weather records. Site selection, cooling systems, water availability, power reliability and network dependencies should be assessed against projected climate conditions over the next 20-30 years, recognising that historical climate data is no longer a reliable predictor of future impacts. 
  2. Build resilience beyond the facility boundary: understanding vulnerabilities across power networks, telecommunications infrastructure, water supplies and critical suppliers is becoming as important as the resilience of the data centre itself.
  3. Safeguard cooling, water and energy security: the defining challenge may not be protecting facilities from climate hazards, but ensuring continued access to the resources upon which they depend. Long-term resilience will increasingly require organisations to navigate competing demands for energy and water while maintaining reliable, efficient and affordable operations.
  4. Quantify and price in climate risk through scenario analysis: climate scenario analysis provides a structured approach to assessing the operational, financial and strategic implications of climate uncertainty and identifying adaptation priorities.
  5. Turn climate risk into a competitive advantage: operators that invest early in resilience, efficiency and resource security will be better positioned to attract customers, meet investor expectations and support long-term growth.

Building the foundations of a climate-ready digital economy 

The organisations that thrive will be those that treat digital infrastructure resilience as a strategic issue today rather than an operational issue tomorrow. Australia is experiencing unprecedented growth in data centre investment alongside increasing climate volatility, energy demand and competition for water resources. The question is no longer where data is stored. It is whether the infrastructure underpinning Australia’s digital economy can remain reliable, affordable and resilient in a hotter, drier and more volatile climate. 

Five questions every digital infrastructure leader should be asking 

  1. Can our infrastructure remain reliable under future climate conditions?
  2. Are we sufficiently protected against interconnected energy, water and telecommunications failures?
  3. How exposed are we to future resource constraints and rising operating costs?
  4. Which climate risks could materially affect asset value, insurability and growth plans?
  5. Are we using climate insights to shape investment decisions before disruption forces our hand?  

At ERM, we support data centre developers, hyperscalers and investors in navigating the critical decisions that shape project success. Our integrated technical, regulatory and commercial expertise helps clients accelerate delivery, de-risk investment and position assets for sustainable growth.  As the sector responds to accelerating digital demand, increasing resource constraints and a changing climate, speak with ERM about site selection, approvals, energy strategy, climate risk, sustainability and the pathways to delivering future-ready digital infrastructure.