Iran’s recent drone strikes across the Gulf revealed a new vulnerability in the global digital economy. For the first time, hyperscale cloud infrastructure that powers banks, fintech platforms, and digital services became a direct target of regional conflict.

According to reporting by Reuters, drone strikes during the regional conflict damaged two AWS data center facilities in the United Arab Emirates, while a nearby strike affected another in Bahrain.

The attacks disrupted power systems, triggered fire suppression systems, and forced operators to isolate affected infrastructure. Several availability zones in the AWS Middle East region went offline while engineers restored operations.

The disruption spread quickly through the regional digital ecosystem.

Banks and fintech platforms reported delayed transactions and degraded services. Consumer applications also experienced outages. Companies including Careem, Emirates NBD, Hubpay, Alaan, Snowflake, and Policybazaar UAE reported disruptions during the incident as cloud workloads failed over to backup infrastructure.

The attacks did not completely destroy the facilities, but they exposed how quickly a localized strike can ripple through a cloud-dependent economy.

Analysts say incidents of this scale typically generate tens of millions of dollars in combined operational losses when infrastructure repair, service downtime, and mitigation costs are included. Cloud operators must repair damaged equipment and restore systems, while customers absorb the cost of interrupted digital services.

A Rapidly Expanding Digital Infrastructure Hub

The Gulf has rapidly become one of the fastest-growing digital infrastructure markets in the world.

Today the Gulf Cooperation Council hosts more than 70 data centers with roughly 557–738 megawatts of live IT capacity.

Country	Estimated Data Centers	IT Capacity
UAE	24–34	240–376 MW
Saudi Arabia	14+	~222 MW
Qatar	7–11	30–50 MW
Bahrain	6–9	50–60 MW
Oman	13–16	10–20 MW
Kuwait	5	5–10 MW
GCC Total	70+	557–738 MW

Governments and technology companies have already announced more than $30 billion in new data center investments, and analysts expect Gulf computing capacity to exceed 2 gigawatts by 2030.

The region also hosts an expanding hyperscale cloud ecosystem. The Gulf currently includes around ten cloud regions operated by Amazon Web Services, Microsoft Azure, Google Cloud, Oracle, and Alibaba. These regions contain approximately 20-25 hyperscale facilities, also known as availability zones.

Saudi Arabia’s plans to build a 500-megawatt AI data center complex illustrate the scale of future expansion.

Infrastructure Concentrated in a Few Cities

Despite this growth, most computing capacity remains concentrated in a handful of metropolitan clusters.

Metro Area	Estimated Capacity
Dubai	150–200 MW
Abu Dhabi	100–150 MW
Riyadh	~110 MW
Dammam / Khobar	60–70 MW
Manama	50–60 MW
Doha	30–50 MW

These hubs contain roughly 80–85 percent of the Gulf’s computing capacity. This concentration means disruptions affecting only a few metropolitan areas could impact most of the region’s cloud infrastructure.

Analysts estimate that up to 70 percent of Gulf data center capacity lies within areas exposed to regional conflict escalation, particularly along the Persian Gulf coastline.

A Global Digital Corridor

The strategic importance of the region extends beyond local markets.

Around 90 percent of internet traffic between Europe and Asia travels through Middle Eastern routes, supported by roughly 20 submarine cable systems and 13 active Internet Exchange Points across the Gulf.

Oman plays a particularly important role in this connectivity network. The country hosts five submarine cable landing stations and connections to more than fourteen international cable systems, positioning it as a key gateway linking Asia, Europe, and Africa.

As hyperscale cloud infrastructure and submarine cable networks continue expanding, the Gulf increasingly serves as a digital bridge between continents.

Conflict Risk Meets Digital Infrastructure

Cloud data centers are no longer just technical facilities, they have become critical infrastructure and Iran’s strikes demonstrated how modern conflicts now intersect with infrastructure that powers the digital economy.

Cloud data centers now sit alongside ports, pipelines, and power plants as strategic assets. The more the Gulf becomes a hub for cloud infrastructure, AI computing, and global internet traffic, the more regional instability can trigger international digital disruptions.

The attacks on AWS facilities therefore represent more than a regional security incident. They highlight a structural risk: a growing share of global digital infrastructure now operates inside one of the world’s most geopolitically volatile regions.

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About the Author

Matvii Diadkov is a technology investor and operator with over a decade of experience building digital infrastructure platforms across logistics, e-commerce, real estate, blockchain technologies, and AI. His work includes ecosystem-level deployments and advisory roles tied to Vision-aligned digital systems in asset-heavy sectors across Oman and the wider region, where he also an adviser to Gulf businesses on digital transformation and infrastructure development.

The post Middle East Conflict Could Put $30 Billion of Digital Infrastructure at Risk appeared first on Data Center POST.

While power dominates the headlines in AI infrastructure, water is the silent arbiter of project viability. Investors and developers obsess over megawatts and grid capacity, but the reality is that cooling systems are tethered to a resource that is often less predictable and more politically charged. When water or wastewater capacity hits a ceiling, the fallout moves beyond engineering. It triggers permitting stalls, operational interruptions, and structural impairment of asset value.

Across the U.S., municipalities are no longer just providing service; they are becoming the ultimate ‘gatekeepers’ for high-volume users. For instance, Tucson now requires any new or expanding large water user expecting more than 7.4 million gallons per month to submit a conservation plan, undergo public review, and secure City Council approval before accessing Tucson Water.

Marana’s policy further states that Marana Water will not supply potable water to data centers for cooling and requires documentation of an alternate source. In Chandler, the city council unanimously rejected a proposal to rezone land for a 422,000-square-foot AI data center campus after public opposition emphasized water use, noise, and limited local benefit.

Strategically positioned between engineering and financial close, these water policies represent a major ‘blind spot’ for developers. Late-stage discovery of water limitations results in stranded capital and protracted entitlement delays. For modern investors, such water risk is now a primary underwriting variable that can dictate the viability of an entire transaction.

Why Power Is Only Half the Constraint

Power determines how much IT load can be energized, but cooling determines whether that load can operate within temperature limits on peak summer days. Cooling design also determines whether the site depends on local water, meaning the true constraint is rarely singular.

Data centers typically rely on one of two primary heat rejection approaches.

Evaporative systems, such as cooling towers, remove heat through water evaporation. This requires continuous makeup water to replace evaporative loss and generates blowdown to control mineral concentration. Blowdown becomes a wastewater stream, tying the facility to sewer capacity, discharge regulations, and pretreatment requirements.

Dry systems, such as air-cooled chillers and dry coolers, reduce direct on-site water consumption but increase electrical demand as outdoor temperatures rise, particularly during summer peaks. That shift moves the constraint toward grid capacity and power pricing during the very hours when electricity is most expensive and constrained. In both configurations, the constraint does not disappear but shifts, and each approach carries a distinct exposure profile that must be evaluated at the basin and grid level.

Inside the Water Footprint of AI Data Centers

Water exposure extends beyond the visible intake line and is often more complex than initial site reviews suggest.

In tower-based systems, make-up water demand rises as ambient temperatures increase because more heat must be rejected during peak hours. Blowdown volumes also rise, increasing steady wastewater discharge. In many jurisdictions, wastewater capacity determines viability before raw water supply does. Dissolved solids and treatment chemistry can trigger pretreatment mandates or exceed plant acceptance thresholds, creating operational bottlenecks that were not modeled at the outset.

The true water footprint of an asset is often obscured by ‘siloed’ diligence. While a facility might minimize on-site usage, it remains tethered to the water intensity of the local energy mix—a dependency that creates a hidden risk during peak demand. Because most models consider water, power, and wastewater as isolated variables, the full scale of the water-energy nexus is rarely consolidated. This leaves the project exposed to systemic failure points that only become visible late in the development cycle.

Why Water Risk Is Frequently Mispriced

The assumption that water is a stable, predictable utility is a significant blind spot in traditional underwriting. Standard diligence often stops at a letter of intent from a provider, ignoring regulatory contingencies—such as recycled water mandates or peak-heat restrictions—that govern high-intensity facilities. Failing to account for these municipal requirements leads to Capex volatility and structural delays, turning a simple utility expense into a primary threat to projected returns.

At a portfolio level, aggregated corporate reporting can obscure localized exposure. Average water intensity metrics do not reveal whether specific assets sit in basins facing physical scarcity or wastewater systems operating near capacity. Valuations that assume perpetual expansion can fail at the local level when additional allocation is unavailable, undermining long-term growth assumptions embedded in underwriting models.

From Environmental Constraint to Financial Exposure

Water risk tends to accumulate over time, moving through operations, regulation, and local politics until it becomes a real constraint on performance.

For operators, the first pressure points are often summer peaks, when supply limits tighten and water quality can swing at the exact moment cooling systems are working hardest. This dilemma then leads to emergency operational changes that pull maintenance forward, or take short outages. Ultimately, the revenue impact of those decisions is usually disproportionate to the duration of the disruption.

For developers, on the other hand, regulatory shifts can trigger midstream redesigns. A project engineered around potable water may be required to transition to reclaimed supply, adding infrastructure, storage, and treatment complexity after capital has already been committed.

Public opposition at the local level introduces political friction that stalls approvals and compounds reputational risk. Contentious infrastructure upgrades can derail project schedules and force unfavorable cost-sharing renegotiations. Collectively, these municipal factors feed into underwriting through increased delay risk, Capex volatility, and a diminished capacity for long-term expansion.

What Needs to Change in Infrastructure Planning

Water must be evaluated at the same stage as power during site screening and early design.

A simple confirmation of water availability is no longer sufficient. Basin-level allocation rules, drought contingency plans, wastewater capacity, discharge quality requirements, and embedded grid water intensity must be assessed before engineering assumptions are finalized.

Every investment memo and design review should include a transparent water balance that identifies source type, volume requirements, discharge pathways, and regulatory triggers under peak conditions. This allows engineering and underwriting teams to evaluate exposure in parallel rather than sequentially.

Water limits are now shaping asset values in a direct, measurable way. Resilience starts with expansion plans that can hold up under tighter supply caps, and with capital that funds backup sourcing options and protection against shifting rules. Financing and insurance need to move to basin-by-basin risk models, because water availability is already the deciding factor in approvals and the constraint that most reliably dictates whether an asset can keep performing over time.

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About the Author

Dr. Vian Sharif is the Founder and President of NatureAlpha, an AI-first fintech platform delivering science-based environmental risk insights across nearly $3 trillion in assets under management. With 20 years of experience at the intersection of finance, technology, and sustainability, she also serves as Head of Sustainability at FNZ Group and is a global advisor on nature-aligned investing. She holds a PhD in Environmental Behavior Change and was recognized with a 2025 Fin-Earth Award for Natural Capital and Biodiversity.

The post Why Water Risk Is the Missing Variable in AI Infrastructure Planning appeared first on Data Center POST.

Originally posted on DāSTOR LLC.

Healthcare organizations are under increasing pressure to protect patient data while maintaining uninterrupted clinical operations. Ransomware activity continues to target hospitals, regulatory scrutiny is rising, and years of accumulated unstructured data have made security and compliance more difficult to manage. At the same time, many organizations are being asked to modernize infrastructure and prepare for cloud adoption with limited internal resources.

As a strategic technology partner to the New Jersey Hospital Association (NJHA), DāSTOR is working with member hospitals to bring unstructured data under control, strengthen security, and build a more reliable foundation for future AI and analytics. This collaboration focuses on giving hospitals a clearer view of their data so they can reduce risk, curb costs, and move forward with confidence.

Unstructured Data Risk in Healthcare

Much of a hospital’s most sensitive information lives in unstructured form, including clinical documents, imaging files, shared drives, and historical records. These files often remain accessible long after their primary use has ended, increasing storage costs and expanding the attack surface for ransomware and other threats.

When teams lack a complete inventory of this data, several challenges follow:

• Limited visibility into where sensitive patient data resides
• Greater exposure during ransomware and breach events
• Compliance risk from over-retention and inconsistent classification
• Rising storage and backup costs driven by low-value data

Many hospitals already invest in security tools, yet still lack visibility into the data those tools are meant to protect.

To continue reading, please click here.

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As organizations modernize infrastructure, expand cloud environments, and support hybrid workforces, cybersecurity strategies are evolving alongside them. While investments in network security, data center resilience, and endpoint protection continue to grow, one constant remains: people are often the first line of defense against phishing and social engineering threats.

To address this reality, Aureon has introduced a new Security Awareness Training platform designed to help organizations reduce preventable incidents through continuous, behavior-focused education. The solution combines realistic phishing simulations, adaptive learning modules, and executive-level reporting to support measurable improvement over time.

Moving Beyond Check-the-Box Training

Traditional security awareness programs frequently rely on annual compliance-based training. While important, that approach alone may not reflect the pace at which threat actors adapt their tactics.

“Security awareness has to move beyond annual check-the-box training,” said Rhiannon Thompson, Product Manager, Managed Services at Aureon. “With Aureon Security Awareness Training, customers get continuous, adaptive education tied to real-world threats, along with executive-level reporting that helps organizations demonstrate measurable impact.”

Aureon’s platform incorporates multi-vector phishing simulations built around realistic, AI-driven scenarios. These simulations provide employees with practical exposure to common attack techniques, helping reinforce recognition and reporting behaviors in real-world contexts.

Adaptive microlearning modules further tailor content based on role, department, and individual risk exposure. By aligning education with job function and industry requirements, organizations can deliver more relevant training while strengthening overall security culture.

Executive Visibility into Human Risk

In addition to end-user training, the platform provides leadership teams with actionable insight. Human risk dashboards track reporting rates, risky behaviors, and improvement trends, offering a clearer view into how employee behavior evolves over time.

This level of visibility enables organizations to demonstrate progress internally and support audit readiness through policy acknowledgments, attestations, and structured reporting. For regulated industries in particular, tying awareness initiatives to measurable metrics can simplify governance efforts.

“Organizations don’t just need awareness, they need resilience,” said Joseph Johnson, VP Product Development at Aureon. “Our training helps make security an everyday habit, reducing preventable incidents and strengthening security culture across teams.”

Managed Support for Sustainable Impact

Beyond the technology itself, Aureon provides managed program support that includes implementation, campaign oversight, and ongoing reporting. This approach is designed to ensure that security awareness remains consistent and adaptive rather than a one-time initiative.

As digital infrastructure grows more complex, strengthening security posture requires attention not only to systems and networks but also to the individuals interacting with them daily. Continuous education, realistic simulations, and executive-level insight together form a framework that supports long-term organizational resilience.

For more information about Aureon’s Security Awareness Training solution, visit www.aureon.com/landing/what-is-security-awareness-training.

The post Aureon Strengthens Security Culture Through Continuous Awareness Training appeared first on Data Center POST.

Climate Energy Finance’s Tim Buckley argues that geopolitical instability exposes Australia's oil dependency and positions the country as a safe haven for international renewable energy capital.

Data centers are the backbone of modern digital infrastructure. They power cloud services, financial systems, healthcare platforms, and nearly every technology-driven business. As demand for data storage and processing grows, so do the operational, financial, and risk-related challenges data centers face. For managers, understanding these issues and knowing how to address them proactively is critical to maintaining uptime, security, and long-term viability. This is what you need to know to ensure you can meet up with demand.

Rising Energy Costs and Efficiency Demands

One of the most persistent challenges for data centers is energy consumption. Powering servers, cooling systems, and redundancy infrastructure requires enormous amounts of electricity, and energy costs continue to rise globally. Beyond cost, there is increasing pressure from regulators and customers to reduce environmental impact.

Managers can address this by investing in energy-efficient hardware, optimizing airflow and cooling layouts, and adopting real-time monitoring tools to identify waste. Long-term strategies may include transitioning to renewable energy sources or partnering with utility providers for more favorable pricing structures.

Cooling and Thermal Management Challenges

Heat is an unavoidable byproduct of high-density computing. Inefficient cooling not only increases costs but also raises the risk of equipment failure and downtime. As server densities increase, traditional cooling methods often struggle to keep up.

Modern solutions include hot-aisle/cold-aisle containment, liquid cooling, and AI-driven thermal monitoring systems. For managers, the key is treating cooling as a dynamic system rather than a fixed infrastructure. However, this needs to be one that evolves alongside hardware demands.

Financial Risk and Insurance Considerations

Data centers face significant financial exposure from equipment damage, downtime, liability claims, and unforeseen events. Even with strong operational controls, risk cannot be eliminated entirely.

This is where insurance becomes a critical part of risk management. Evaluating coverage that aligns with the unique needs of data center operations can help protect against losses that would otherwise threaten business continuity. BOP insurance by Next Insurance can help managers think more holistically about protecting assets, operations, and revenue streams as part of an overall risk strategy.

Downtime and Business Continuity Risks

Even brief outages can result in significant financial losses, reputational damage, and contractual penalties. This downtime may be caused by:

• Power failures
• Human error
• Equipment malfunction
• External events

To mitigate this risk, managers should prioritize redundancy at every critical point, including power supplies, network connections, and backup systems. Regular testing of disaster recovery plans is just as important as having them documented, too. A plan that hasn’t been tested is often unreliable in real-world conditions. You put your business and those whom you cater to at risk.

Cybersecurity and Physical Security Threats

Data centers face a dual security challenge: digital threats and physical risks. Cyberattacks continue to grow in sophistication, while physical threats such as unauthorized access, theft, or vandalism remain real concerns.

Addressing this requires layered security. On the digital side, this includes continuous patching, network segmentation, and monitoring for unusual activity. Physically, access controls, surveillance systems, and strict visitor protocols are essential. Managers should also ensure that staff training keeps pace with evolving threats, as human error remains a major vulnerability.

Compliance and Regulatory Pressure

Data centers often operate under complex regulatory requirements related to data privacy, industry standards, and regional laws. Compliance failures can result in fines, legal exposure, and loss of customer trust.

Managers can stay ahead by maintaining clear documentation, conducting regular audits, and working closely with legal and compliance teams. Building compliance into operational processes, rather than treating it as an afterthought, reduces risk and simplifies reporting.

Turning Challenges Into Strategic Advantage

While data centers face a wide range of operational and strategic challenges, these issues also present opportunities for improvement and differentiation. Managers who address all of the above proactively are better positioned to deliver reliability and value in a competitive market. Don’t let yours be the one that falls victim to the issues and instead take action.

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About the Author:

James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can spend hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.

The post Issues Data Centers Face and How to Overcome Them: A Guide for Managers appeared first on Data Center POST.

At infra/STRUCTURE 2025, held at The Wynn Las Vegas, industry leaders from Structure Research, Iron Mountain, Compass Datacenters, and TA Realty examined how hyperscales are evolving faster than ever and changing the landscape in data infrastructure.

During the infra/STRUCTURE Summit 2025, held at The Wynn Las Vegas from October 15-16, a panel of industry leaders explored how global hyperscale development models are being transformed by changing procurement dynamics, third-party partnerships, and market-specific constraints.

Moderated by Ainsley Woods, Research Director at Structure Research, the session “Shifting Hyperscale Landscape and Engagement Models” brought together a mix of perspectives from across the ecosystem: Rohit Kinra, Senior Vice President and General Manager of Hyperscale at Iron Mountain; Chris Crosby, CEO of Compass Datacenters; and Adam Black, Senior Vice President of Design and Construction at TA Realty. Together, they discussed how hyperscalers and operators are realigning strategies to manage cost, speed, and risk in an increasingly complex global landscape.

Shifting Toward Third-Party Leasing

Opening the session, Woods noted that while self-build remains a significant approach for hyperscalers, the shift toward third-party leasing continues to accelerate. Kinra explained that this movement reflects a growing appetite to transfer financial and operational risk to providers better equipped to deliver consistent, on-schedule capacity.

“This dynamic enables hyperscalers to focus on core digital capabilities while maintaining agility,” said Kinra.

Crosby observed that data center companies have evolved from highly specialized infrastructure firms into multifunctional operators that behave more like software-driven entities. “The mindset is shifting from ‘construction’ to ‘continuous delivery,’ emphasizing iterative improvement and efficiency at scale.”

Procurement Models and Utility Coordination

Woods directed the discussion toward procurement models, noting “that evolving regulations and nimbyism are materially reshaping project timelines and commitments.”

“Hyperscale leasing can range from single-megawatt tranches to long-term strategic leases, striking a balance between flexibility and guaranteed availability,” said Kinra.

“The necessity of robust collaboration with utilities, pointing out that committed paperwork and confirmed timelines are now prerequisites for greenlighting new projects,” said Crosby. “This transparency and early engagement build trust and ensure that supply chains remain resilient amid rapid scaling.”

Standardization versus Customization

Bringing an engineering and construction perspective, Black said, “The industry is adopting a manufacturing approach to design and delivery. By standardizing components and processes, data center builders are compressing construction cycles, driving down costs, and minimizing rework.”

At the same time, Kinra warned that “flexibility remains crucial, as hyperscalers must frequently adjust designs based on power availability and evolving hardware requirements. Balancing repeatability and adaptability will continue to define long-term competitiveness in global hyperscale markets.”

Partnering for Speed and Scale

When asked whether third-party providers could outperform self-build models, Kinra pointed to overseas examples.

“In high-density Asian markets,” said Kinra, “it’s where leasing has provided a faster and less risky entry point.”

“Experienced operators, especially those with industrial real estate expertise, bring an unlocking function to hyperscalers, helping them secure viable space and navigate permitting challenges,” Crosby underscored.

This is where partners may play a key role in both speed and scale.

“Collaboration, not competition, between hyperscalers and third-party providers will define the next frontier of scale,” said Black. “Flexibility, transparency, and shared accountability are now non-negotiable for long-term partnership success.”

Research, Adaptation, and the Path Forward

In closing, Woods prompted the group for key takeaways. The panelists unanimously emphasized continuous innovation, research, and foresight as the only way to stay aligned with hyperscale’s relentless pace.

“With infrastructure design cycles shortening and technology requirements diversifying,” Kinra concluded, “the winners will be those who can adapt fastest while maintaining reliability and customer focus.”

Infra/STRUCTURE Summit 2026: Save the Date

Want to tune in live, receive all presentations, gain access to C-level executives, investors and/or industry-leading research? Then save the date for infra/STRUCTURE 2026, set for October 7-8, 2026, at The Wynn Las Vegas. Pre-Registration for the 2026 event is now open, and you can visit www.infrastructuresummit.io to learn more.

The post Shifting Hyperscale Landscape: Exploring New Models of Growth, Collaboration, and Risk in Data Infrastructure appeared first on Data Center POST.

The rapid growth of data centers is resulting in one of the most energy intensive sectors of the industrial economy. Providing power to support artificial intelligence, cloud computing, and cryptocurrency mining requires an uninterrupted supply of electricity. To ensure reliability, some data center developers are considering the deployment of small modular reactors (SMRs). These reactors would provide a steady, carbon-free energy source. However, as nuclear energy enters the data center space the question of insurance and how to protect operators and the public becomes critical to ensure progress toward commercial viability.

Understanding Nuclear Insurance Basics

The foundation of nuclear liability insurance in the United States lies in the Price Anderson Nuclear Industries Indemnity Act (1957), which created a unique liability system for nuclear operators. The Act mandates that reactor owners maintain the maximum amount of insurance coverage available in the market to cover potential nuclear liability damages. Currently, each reactor above 100MW is required to carry $500 million in primary coverage, supported by an additional string of retrospective payments from other licensed operators if needed. Reactors that generate more that 10 MW, but do not generate electrical power, and reactors that generate less than 100 MW are required to carry liability insurance between $4.5 and $74 million. The precise amount is governed by a formula based on thermal power and on the local population density.

Nuclear liability insurance is fundamentally distinct from conventional insurance because it addresses specialized, high-consequence, low-probability risks that other markets cannot efficiently underwrite. Commercial insurance disperses risks among individual insurers while nuclear insurance utilizes insurance pools. Pools, such as the U.S. American Nuclear Insurers (ANI) and Nuclear Risk Insurers (NRI) in the UK, combine the capacity of multiple insurers to jointly cover nuclear risks.

These pooling arrangements are necessary because the nuclear risk profile does not adhere to normal actuarial assumptions. Insurers lack adequate historical loss data on nuclear accidents, and maximum loss scenarios are so extreme that no single company could absorb them. The pooling structure allows for a broader distribution of potentially catastrophic losses across multiple insurers.

Underwriting and Risk Assessment

For nuclear property insurance, the focus of underwriters is on plant design, regulatory compliance, and operational culture rather than the statistical loss experience, which dominates conventional property insurance underwriting. Specialized insurance mutuals such as Nuclear Electric Insurance Limited (NEIL) and European Mutual Association for Nuclear Insurance (EMANI) provide coverage for damages to physical plant property. This coverage includes nuclear specific risks which are typically excluded in commercial markets such as on-site decontamination, radiation cleanup, and extended outage losses.

Conventional property insurance underwriters evaluate frequent, well-understood risks based on probabilistic models using large datasets. For nuclear installations, the low number of severe historical accidents, combined with potentially enormous losses like those sustained at Fukushima and Chernobyl precludes the traditional risk-based rating and instead relies on specialized engineering assessments.

Early engagement with markets is essential

SMR projects are no different than traditional capital projects with respect to builder’s risk insurance coverage during construction, however, when fuel arrives on site, the requirements for coverage and the availability of insurance capacity drastically changes. It is important for project managers to engage with underwriters early in the conceptual design phase to ensure adequate coverage is available. Since SMRs will likely be viewed by underwriters as first-of-a-kind technology with different safety and operational profiles compared to traditional nuclear reactors, they will want to understand the design, construction, and operational nuances to evaluate whether they would insure the risk. This early collaboration allows insurers to identify specific risk exposures at each stage of development, from off-site manufacturing to on-site assembly and nuclear fuel commissioning avoiding any gaps in coverage, particularly during the transition from construction to full operation. Failure to involve insurers early may lead to coverage fragmentation or exclusions, impacting financing and project timelines.

Nuclear property and liability insurance diverges from conventional insurance primarily through collective risk-sharing and the absence of market-based underwriting models. Its unique nature reflects the complexity of managing nuclear risks. As companies explore the deployment of SMR’s to power data centers, understanding these distinctions is crucial to designing viable insurance programs and avoiding any bottlenecks that could delay operation.

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About the Author:

Ron Rispoli is a Senior Vice President in the Energy Group at Stephens Insurance. His primary focus is assisting clients in navigating the complex landscape of nuclear property and liability coverage for both existing and future nuclear facilities. He also provides risk management consultation services to utility clients, with an emphasis on emerging risks in nuclear construction. He works to help clients understand the critical role insurance plays in managing risks associated with nuclear operations and activities. He has over forty years of experience in the commercial nuclear arena.

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