Spend 5 minutes reading comments on almost any proposed data center project, and you'll notice a familiar pattern.
"They're going to overload the electric grid."
"They're going to drive up everyone's electric bill."
"They're going to use all of our water."
"They're noisy."
"They don't create enough jobs."
Whether you're reading local news, scrolling through social media, or
attending a zoning meeting, the conversation often sounds remarkably similar. Some of
these concerns are well-founded; others are oversimplified. Many depend entirely on the
design of the facility and the community in which it's being built.
As a risk professional, that's what I find most interesting. Before deciding whether something is a significant risk, we first have to understand what the actual exposure is. Too often, discussions around data centers begin with assumptions instead of questions. Good risk management does the opposite.
"They're Going to Overload the Electric Grid"
This is probably the concern that receives the most attention—and understandably so. Modern data centers require enormous amounts of electricity. As artificial intelligence continues to expand, so does the infrastructure needed to support it. But the relationship between data centers and the electric grid is more nuanced than headlines often suggest.
Utilities do not simply connect large facilities and hope the system performs. New developments typically involve extensive capacity studies, transmission planning, infrastructure upgrades, and long-term forecasting before power is ever delivered.
In some regions, data center demand has accelerated investments in transmission infrastructure, renewable energy, and additional generation capacity. In others, it has simply exposed capacity constraints that already existed within the electrical system. Neither observation is universally true.
The question isn't whether data centers consume significant amounts of electricity—they do. The better question is whether the supporting infrastructure is being planned and developed alongside that demand. That's a fundamentally different risk discussion.
"They're Going to Use All of Our Water"
Water consumption generates similar debate. Like many risk discussions, context matters. Some data centers rely on evaporative cooling systems that require substantial water resources. Others utilize closed-loop or air-cooled designs that significantly reduce consumption. Climate, geography, and facility design all influence how much water is ultimately required.
That doesn't eliminate legitimate concerns, particularly in regions experiencing water scarcity. But it does suggest that broad statements about "how much water data centers use" rarely tell the whole story.
The more appropriate question is whether water consumption is appropriate for the location, available resources, and long-term sustainability objectives of the project.
"They're Noisy"
Backup generators, cooling equipment, transformers, and mechanical systems all generate sound. Without thoughtful planning, nearby residents can absolutely experience noise impacts. Unlike some of the other concerns, this is largely an engineering challenge—and one of the more manageable operational risks.
Modern facilities routinely incorporate acoustic barriers, equipment placement strategies, landscaping, sound attenuation technologies, and operational controls specifically designed to minimize off-site noise.
In other words, excessive noise is rarely an unavoidable consequence of data centers. More often, it's a design consideration.
"They Don't Create Enough Jobs"
Compared to manufacturing facilities or distribution centers occupying similar amounts of land, data centers generally employ fewer full-time workers once operational. Viewed only through permanent headcount, that observation is accurate.
But the broader economic picture is more complicated. Large data center developments often generate years of construction activity, electrical infrastructure improvements, fiber expansion, specialized contractor work, property tax revenue, and ongoing demand for engineering, maintenance, and technology services.
That doesn't mean every project delivers the same economic value; it does mean that permanent employment alone rarely captures the full impact.
Where Risk Management Enters the Conversation
Notice what all of these discussions have in common: None of them begin with an insurance policy; they begin with decisions. They're enterprise risk decisions long before they're insurance questions.
Every organization developing a data center must evaluate operational risk, infrastructure dependency, regulatory requirements, environmental considerations, stakeholder expectations, and long-term resilience.
Just as importantly, organizations must recognize that public perception can become a material risk exposure in its own right. Community opposition can delay permitting. Regulatory scrutiny can increase project costs. Public concern can influence political decision-making. Reputational issues can affect expansion opportunities. These aren't risks that can simply be transferred to an insurer; they must be managed.
Ask Better Questions
One lesson I've learned throughout my career is that effective risk management begins with better questions. Rather than asking whether data centers are "good" or "bad" for a community, organizations should be asking the following questions.
How will this project affect existing infrastructure?
What assumptions are we making about future energy demand?
Is this project's water strategy appropriate for this community?
Are potential noise impacts being addressed through design?
How are community concerns being communicated and managed?
What operational dependencies could affect long-term resilience?
Those questions move the conversation beyond opinion and toward informed decision-making. And that's where risk management provides the greatest value.
Final Thoughts
As demand for digital infrastructure continues to grow,
discussions surrounding data centers will likely become even more visible. Some
concerns will prove well-founded; others may not.
The role of the risk professional isn't to dismiss concerns or
amplify them; it's to separate assumptions from exposures. Good risk management
isn't about having all the answers; it's about asking better questions before
decisions are made.
The public doesn't expect organizations to eliminate every risk. However, they expect organizations to understand the risks that they're creating, communicate them honestly, and manage them responsibly.
And in the rapidly evolving world of data centers, asking better questions may be one of the most valuable risk management tools we have.
The conversation around data centers shouldn't begin with conclusions; it should begin with better questions. Because that's where good risk management begins—and where better decisions are made.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
Spend 5 minutes reading comments on almost any proposed data center project, and you'll notice a familiar pattern.
Whether you're reading local news, scrolling through social media, or attending a zoning meeting, the conversation often sounds remarkably similar. Some of these concerns are well-founded; others are oversimplified. Many depend entirely on the design of the facility and the community in which it's being built.
As a risk professional, that's what I find most interesting. Before deciding whether something is a significant risk, we first have to understand what the actual exposure is. Too often, discussions around data centers begin with assumptions instead of questions. Good risk management does the opposite.
"They're Going to Overload the Electric Grid"
This is probably the concern that receives the most attention—and understandably so. Modern data centers require enormous amounts of electricity. As artificial intelligence continues to expand, so does the infrastructure needed to support it. But the relationship between data centers and the electric grid is more nuanced than headlines often suggest.
Utilities do not simply connect large facilities and hope the system performs. New developments typically involve extensive capacity studies, transmission planning, infrastructure upgrades, and long-term forecasting before power is ever delivered.
In some regions, data center demand has accelerated investments in transmission infrastructure, renewable energy, and additional generation capacity. In others, it has simply exposed capacity constraints that already existed within the electrical system. Neither observation is universally true.
The question isn't whether data centers consume significant amounts of electricity—they do. The better question is whether the supporting infrastructure is being planned and developed alongside that demand. That's a fundamentally different risk discussion.
"They're Going to Use All of Our Water"
Water consumption generates similar debate. Like many risk discussions, context matters. Some data centers rely on evaporative cooling systems that require substantial water resources. Others utilize closed-loop or air-cooled designs that significantly reduce consumption. Climate, geography, and facility design all influence how much water is ultimately required.
That doesn't eliminate legitimate concerns, particularly in regions experiencing water scarcity. But it does suggest that broad statements about "how much water data centers use" rarely tell the whole story.
The more appropriate question is whether water consumption is appropriate for the location, available resources, and long-term sustainability objectives of the project.
"They're Noisy"
Backup generators, cooling equipment, transformers, and mechanical systems all generate sound. Without thoughtful planning, nearby residents can absolutely experience noise impacts. Unlike some of the other concerns, this is largely an engineering challenge—and one of the more manageable operational risks.
Modern facilities routinely incorporate acoustic barriers, equipment placement strategies, landscaping, sound attenuation technologies, and operational controls specifically designed to minimize off-site noise.
In other words, excessive noise is rarely an unavoidable consequence of data centers. More often, it's a design consideration.
"They Don't Create Enough Jobs"
Compared to manufacturing facilities or distribution centers occupying similar amounts of land, data centers generally employ fewer full-time workers once operational. Viewed only through permanent headcount, that observation is accurate.
But the broader economic picture is more complicated. Large data center developments often generate years of construction activity, electrical infrastructure improvements, fiber expansion, specialized contractor work, property tax revenue, and ongoing demand for engineering, maintenance, and technology services.
That doesn't mean every project delivers the same economic value; it does mean that permanent employment alone rarely captures the full impact.
Where Risk Management Enters the Conversation
Notice what all of these discussions have in common: None of them begin with an insurance policy; they begin with decisions. They're enterprise risk decisions long before they're insurance questions.
Every organization developing a data center must evaluate operational risk, infrastructure dependency, regulatory requirements, environmental considerations, stakeholder expectations, and long-term resilience.
Just as importantly, organizations must recognize that public perception can become a material risk exposure in its own right. Community opposition can delay permitting. Regulatory scrutiny can increase project costs. Public concern can influence political decision-making. Reputational issues can affect expansion opportunities. These aren't risks that can simply be transferred to an insurer; they must be managed.
Ask Better Questions
One lesson I've learned throughout my career is that effective risk management begins with better questions. Rather than asking whether data centers are "good" or "bad" for a community, organizations should be asking the following questions.
Those questions move the conversation beyond opinion and toward informed decision-making. And that's where risk management provides the greatest value.
Final Thoughts
As demand for digital infrastructure continues to grow, discussions surrounding data centers will likely become even more visible. Some concerns will prove well-founded; others may not.
The role of the risk professional isn't to dismiss concerns or amplify them; it's to separate assumptions from exposures. Good risk management isn't about having all the answers; it's about asking better questions before decisions are made.
The public doesn't expect organizations to eliminate every risk. However, they expect organizations to understand the risks that they're creating, communicate them honestly, and manage them responsibly.
And in the rapidly evolving world of data centers, asking better questions may be one of the most valuable risk management tools we have.
The conversation around data centers shouldn't begin with conclusions; it should begin with better questions. Because that's where good risk management begins—and where better decisions are made.
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.