Telecoms, Data Center Trends Heighten Climate Risks, Vulnerability

Like water, energy and waste management, digital telecommunications and data centers have become utilities essential for modern societies to function sustainably. It is generally accepted that the increasing frequency and intensity of extreme weather events -- and the onset of gradual, long-terms shifts in weather patterns and climate -- pose existential threats to critical information and communications technology (ICT) supply chains, as well as infrastructure.

But a recent report from Riverside Technology and Acclimatise found that the business risks of climate change as they relate to telecommunications and data centers are poorly recognized -- particularly with respect to infrastructure and supply chains. Similarly, climate change resiliency and adaptation plans in this critical segment of the U.S. ICT sector are poorly developed, concluded the report, which was conducted on behalf of the federal government's General Services Administration (GSA).

“Despite the importance of these sectors, the climate risk they face is poorly understood. Even less understood are climate risks to the supply chains both sectors rely upon,” the authors of Climate Risks Study for Telecommunications and Data Center Services highlight. Furthermore, though it boosts operational efficiency and the bottom line, the recent trend that has seen more and more companies sharing ICT resources – platform-as-a-service (PaaS) and infrastructure-as-a-service (IaaS), for instance – increases the vulnerability of critical ICT infrastructure and supply chains to the impacts of extreme weather events and more gradual shifts in climate.

Extreme weather, climate change, and ICT infrastructure and supply chains

Bangkok's floods, Superstorm Sandy and Typhoon Haiyan are among the extreme weather events that have caused the loss of many lives, displaced many more families, and resulted in billion-plus-dollar losses to the economies of Thailand, the U.S. and the Philippines in recent years. A total of 258 natural disasters combined to cause $132 billion in economic losses worldwide in 2014, according to reinsurance company Aon Benfield's 2014 Annual Global Climate and Catastrophe Report.

Fifty-three percent of last year's global insured losses from natural disasters occurred in the U.S.

2014 was the second consecutive year of below-normal catastrophe losses. The year before, however, saw a record number of “billion-dollar weather disasters” around the world, according to Aon Benfield's research.

As the GSA report authors point out, “Disruptions in the ability to communicate or access information severely inhibit governments, companies, and citizens, and in periods of disaster or extreme events, this inability to communicate puts national and human security and business value at risk. Climate variability and change may threaten the infrastructural integrity and productivity of these critical sectors, increasing the number and severity of disruptions. Extreme or unusual weather can lead to cascading impacts felt across sectors and borders.”

Climate adaptation and resilience across telecoms, data centers

Climate risk and vulnerability in the ICT sector are poorly understood, particularly when it comes to recognizing risks and planning to adapt to gradual, long-term shifts, the report's authors continue. Even less well-understood are the risks climate change poses to ICT supply chains, as well as how resilience can be enhanced. "Extreme weather events, like Hurricane Sandy in 2012 and the Thai floods in 2011, dramatically show the potential economic cost of climate change in the near term,” the authors state.

“However, cumulative or gradual climate impacts are less likely to be studied due to failure to spot the signals if operating performance gradually deteriorates, uncertainty of the timing and magnitude of impacts, the absence of stakeholder consensus in the wake of an extreme event, and the short- term decision-making time frames of many businesses.”

Riverside Technology and Acclimatise's report for the GSA “presents an initial step toward understanding how climate change may disrupt these sectors, how resilience can be fostered, and recommends next steps.” In doing so, Riverside and Acclimatise produced maps of telecoms and data center infrastructure and supply chains and used them as a basis for elaboration.

The report's authors also note that ICT equipment used in telecoms and data centers “were designed to function within within specific climate and environmental conditions." Climate change (which can include both incremental changes as well as extreme events) can impact the operating parameters and enterprise supply chains, causing impacts to telecoms and data center companies and their customers.

“Impacts may result in changes to functionality, quality of service, return on investment, business continuity, and cost, in addition to cascading impacts on the diverse customers that rely upon them. Value protection strategies are required to address these risks.”

Operational efficiency, climate risks and vulnerability

Compounding climate risks is the trend toward outsourcing of telecoms and data center functions to third-party hosting companies and managed services providers, according to the report. Such initiatives increase operational efficiency and can result in reduced IT costs and new revenue-generating opportunities. But they also reduce redundancy across the network and generate single points of failure, the report's authors highlight.

Drawing on case studies from around the world, the GSA report authors offer examples of adaptation options and early instances of initiatives being undertaken by telecoms companies to enhance climate resilience. They also provide a summary list of key recommendations:

• Frame climate risks as business risks using the language of business, not science. And contextualize climate risk from the perspective of private sector companies, their customers, investors and regulators.


• Plan for both a changing climate baseline and for climate extremes. Successfully addressing climate risk requires careful attention to subtle impacts (e.g., the cumulative impact of increasing sequences of warmer than average days on wired telecommunications) as well as to the effects of extreme storms.


• Build awareness of climate risks before disasters strike. Working with stakeholders to build consensus and collect the information each offers is to effectively build resilience.


• Conduct direct consultations with the private sector to understand their needs, strengths and weaknesses, as these stakeholders know the business, sites and technologies best and can help build understanding of what would happen under likely climate scenarios.


• Thoroughly assess climate risk of both telecoms and data center sectors, informed by consultations with experts and stakeholders. This will allow for the prioritization of risks to both sectors according to their relative consequence and likelihood;


• Require federal service providers to demonstrate climate resilience in all procurement processes, with suppliers required to undertake a climate risk assessment and demonstrate how their products and services will continue to meet required contractual and serviceability performance standards;


• Elucidate, test and document adaptation options as value protection strategies in both sectors, as many of these strategies and fixes remain prescriptive, not detailed and/or untested;


• Assess operating headrooms for key assets in both sectors to understand the functional thresholds for critical assets in a changing climate, which will assist in identifying and prioritizing risks, planning operational maintenance and informing future capital expenditures;


• Assess both sectors within the context of their asset lifetimes, with climate risk assessments scaled to the life cycles of assets and equipment. Though lifetimes are short, assets must be robust during their useful lives;


• Include telecoms and data centers in the fourth National Climate Assessment, alongside other key sectors already represented.
  Provide guidance on SEC material risk disclosure.

*Image credits: 1, 3 & 4) Riverside Technology, Acclimatise for the GSA; 2) Aon Benfield