The physical backbone of artificial intelligence—data centers—is facing a new reality of risks that extends far beyond the digital realm. According to a recent report by Howden, the rapid expansion of AI infrastructure no longer requires just capital, but a complex management of geopolitical, legal, and environmental threats.
The Rise of Legal Disputes
Local resistance and environmental concerns are becoming significant hurdles for data center development. In the first half of 2026, 14 major legal cases were recorded in the sector, compared to just four in all of 2021. Notably, 78% of the increase in liability cases over the last three years is attributed to disputes over planning permits, environmental impacts, noise, and high water consumption.
In Europe, which hosts approximately 3,300 to 3,500 facilities, the pressure is mounting. In the UK, the regulator Ofgem has already warned about the excessive strain that planned projects could place on the national power grid.
From Cyberspace to Battlefields
The Howden report highlights a historic shift in infrastructure security: the deliberate targeting of commercial data centers in armed conflicts. Five facilities in the United Arab Emirates and Bahrain were struck by Iranian drones, marking the first such recorded instance in a conflict.
The sector's geographic exposure is intensifying. In 2025, the total area of facilities located within 10-15 kilometers of active war zones reached approximately 60% of the total recorded over the previous five years. This trend complicates the insurance market's role, as the boundaries between cyber risk, physical damage, and war risk become increasingly blurred.
Strategic Site Selection
Edward Howland Jackson of Howden emphasizes that AI investments now require a holistic approach. Site selection is no longer just a matter of connectivity but also of physical protection. For investors and operators, early identification of vulnerabilities and securing adequate insurance coverage have become critical elements of business planning.
