FM's Hodge highlights renewable energy and data centre growth as emerging risks

By Mia MacGregor

May 14 - (The Insurer) - The reliability of renewable energy and the proliferation of data centres are emerging as major risks for the commercial insurance industry, FM's COO Randy Hodge has warned.

"The risk quality of renewable infrastructure is not as high as traditional power generation that has been established for many years. So there is a substantial risk to the industry as a whole in terms of the reliability of renewable power," Hodge stated.

“Not enough is being invested in renewable energy and systems resilience,” he explained. “Issues like resistance to hail for solar panels and wind resistance are critical, solar panels on rooftops are burning down and causing fires. So there's a lot of opportunity for improvement.”

Hodge emphasised that these issues not only affect individual clients with solar systems but also those relying on renewable power.

"I categorise data centres similarly," Hodge continued. "As more and more companies increasingly outsource their cloud and AI computing capabilities to third-party facilities, which are essentially real estate facilities, the risk quality of these data centres becomes crucial.”

He explained that vulnerabilities to things like climate perils or fire can have severe consequences.

“If a facility goes down and clients are dependent on it, and they don't have the ability to process data and AI, what's going to happen? They go down. It would be like losing electricity or water.”

Hodge added: “(At FM) we’re investing heavily in becoming more integrated in the data centre industry, ensuring those facilities are designed very, very well, not only for the clients that build and own these data centres but also for those with equipment there.”

FM recently launched the FM Intellium program to help clients understand risks associated with the recent AI and cloud computing boom.

The program is a virtual on-demand resource unit that includes subject matter expert resources globally, enabling the commercial property insurer to integrate data risk with related power and infrastructure projects to offer solutions for all engineering interdependencies.

FM's portfolio currently includes around 1,100 data centres representing $250 billion of insurable value.