How fire risk is evolving and what organisations can do to protect operations and supply chains
In today’s hyperconnected world, physical events are still capable of disrupting digital infrastructure, and with it, entire businesses. Data centre fires, while uncommon, are one such threat. When they occur, the consequences can be severe: loss of service, supply chain breakdowns, regulatory exposure, financial losses, and long-term reputational damage.
As more organisations adopt cloud-based systems and outsource critical IT operations, the reliance on third-party data centres has grown exponentially. And so has the complexity of the risks.
How likely are data centre fires?
Globally, major data centre fires are infrequent, but not rare. Between 2014 and 2023, at least 22 significant incidents involving fire or explosion were reported. The causes are well-documented:
Electrical failures due to overloaded circuits or faulty installations
Overheating from high-density server racks operating beyond cooling capacity
UPS battery failures particularly in lithium-ion systems
Human error during maintenance or equipment replacement
Inadequate maintenance or outdated fire suppression systems
As data centres evolve to accommodate greater computing loads, high-density environments have become more common. These designs increase efficiency but also introduce additional thermal and electrical stress. Without appropriate detection and suppression, these conditions can create high-risk ignition scenarios.
Modern systems such as Very Early Smoke Detection Apparatus (VESDA), clean agent suppression technologies (e.g. NOVEC 1230, FM-200), and oxygen-reduction systems can help mitigate fire risk - but their effectiveness depends on regular testing, compliance with codes and regulations, and strong operational controls.
Single event, systemic impact
When a data centre goes offline due to fire, the disruption often extends far beyond the facility itself. Businesses relying on affected systems can experience prolonged downtime, delayed services, and in some cases, data loss.
This ripple effect is particularly acute in industries that are highly digitised or time-sensitive:
Financial services may face ATM outages, failed transactions, or mobile banking downtime
Healthcare systems can lose access to diagnostics, records, or scheduling platforms
Retail and e-commerce operations risk losing order data, customer engagement, or peak-hour revenue
Manufacturing and logistics suffer from disrupted automation, IoT systems, or SCADA controls
Public sector and emergency services may experience gaps in coordination, communication, or citizen services
Aviation and transport may lose access to booking engines, operational tracking, and safety systems
These outages can lead to contractual breaches, SLA violations, and in regulated industries, increased scrutiny. The longer the disruption, the higher the potential for reputational and financial harm.
Mitigating fire risk: prevention before recovery
Reducing the risk of fire and improving readiness when one occurs requires a combination of technical, operational, and strategic measures.
Key prevention and detection practices include:
Advanced detection systems: VESDA, thermal imaging, and integrated sensor networks
Clean agent and inert gas suppression: Minimising equipment damage during activation
Passive protection: Fire-rated compartments, containment zones, and cable segregation
Preventive maintenance: Regular testing of electrical systems, UPS units, and cooling infrastructure
Operator training: Fire life safety protocols for all technical and facilities personnel
Redundancy planning: Ensuring failover capacity across geographically separate sites
Common shortcomings such as outdated suppression systems, incomplete risk assessments, or over-reliance on single-site providers, often surface only during an actual event. Closing these gaps is essential to improving operational resilience.
Understanding third-party exposure
For many organisations, their most critical systems reside not on premises but in co-location facilities or with cloud providers. While service-level agreements (SLAs) offer performance guarantees, they don’t always cover the full spectrum of loss that can arise from physical disruption.
Effective risk management requires:
Mapping digital and operational dependencies on external data centres
Assessing the potential business impact of outages: financial, operational, reputational
Conducting scenario modelling and continuity planning for physical events
Reviewing business interruption and contingent business interruption coverage
Evaluating cyber policies for overlaps or exclusions related to physical damage
Aligning insurance limits and deductibles with current operational realities
Understanding how policies respond and where gaps may exist is especially important when physical and digital risks intersect.
A holistic approach to resilience
Fire risk in data centres isn’t just a facilities issue, it’s a business continuity and supply chain issue. Resilience starts with prevention, but it also includes readiness: clear response protocols, backup systems, and appropriate insurance arrangements.
Advisory support can help organisations identify exposures, quantify risk, and ensure that continuity plans and insurance programmes reflect the full spectrum of potential disruption. In our work across infrastructure, logistics, industrial, and digital sectors, we've seen how integrated risk strategies can significantly reduce the impact of unexpected events.
Today’s risk environment demands a layered, integrated approach: operational resilience backed by advanced safety measures, smart insurance policy design, as well as expert, real-time advisory.
If you’d like to assess your current exposure, review your policy limits, or speak to one of our data centre risk specialists, get in touch with us (opens a new window). We’re here to help protect your business.
