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Geographic concentration of data centers

Clustering of a disproportionate share of global data center capacity in a small number of geographic hubs, creating a localized accumulation risk.

Definition

Geographic concentration of data centers refers to the clustering of a disproportionate share of global hosting capacity in a small number of hubs. Operators pick them for cheap power, tax treatment, fiber connectivity, or because other digital infrastructure is already there. Each operator's choice makes sense on its own. Across the sector, it builds up an accumulation of risk that no single player measures. A regional grid failure, a natural disaster or capacity saturation in the hub can hit a significant share of the world's digital infrastructure at once, even though it is hosted by competing operators with no ownership link between them. For insurers, risks that look independent, because they sit with different insureds under different policies, turn into one correlated risk. Its aggregate severity can far exceed the perceived sum of individual exposures. That is a classic modeling blind spot in accumulation analysis for a cyber or technology portfolio.

Its 7 cross-references, woven across the glossary's 18 categories
Geographic concentration of data centers: Infrastructure & data centers glossary illustration, AlgoPolis
Example

Loudoun County in Northern Virginia, nicknamed "Data Center Alley," has one of the highest densities of data centers in the world. A very large share of global internet traffic runs through that one area.

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