United StatesIt is hard to overstate the global economy’s dependence on reliable power, water and broadband supplies.
Yet decades of sustained underinvestment have contributed to inadequate and unreliable infrastructure that undermines economic potential. The American Society of Civil Engineers estimates that failing to modernise infrastructure could stunt potential US GDP by US$10tn by 2039.1
Ageing physical assets look increasingly susceptible to the impacts of climate change, while infrastructure critical to the modern economy looks vulnerable in an era of rising geopolitical tension and conflict.
Opportunities stand out for companies within the power, water, transport and cybersecurity sectors whose products and services can strengthen the resilience of critical infrastructure in the face of these threats.
Infrastructure failures risk undermining prosperity and security
Creaking US infrastructure, which received only a ‘C’ rating from the ASCE last year, is estimated to cost each US household US$2,700 a year.2 In early 2021, poor grid resilience led to blackouts for more than 4.5mn Texan homes amid historic winter storms, giving rise to roughly US$195bn in property damage.3
The costs of water outages can also be significant, especially for water-intensive industries: data centre operators lose around US$10,000 per minute where cooling systems fail.4 The consequences of ageing, poorly maintained assets can also be grave: for example, 43 lives were lost when Genoa’s Morandi motorway bridge collapsed in 2018.
Climate change is exacerbating the risks and costs of infrastructure failures. More intense rainfall (including in areas previously immune to extreme weather) raises vulnerability of assets to flooding and landslips, while more intense droughts strain water supply networks and undermine supply to critical industries. In 2025, insured losses from natural catastrophes exceeded US$100bn for the sixth consecutive year – for context, the average between 1993 and 2022 was US$63bn (in 2023 prices).5
Rising threats to key economic nodes also come in the form of human sabotage. For example, the severance of fibre optic cables carrying global internet traffic in the Baltic Sea and elsewhere illustrates the vulnerability of digital infrastructure to acts of ‘hybrid warfare’.6 Subsea power grid interconnectors and gas pipelines are similarly exposed and, by their nature, hard to protect.
The crisis in the Middle East has meanwhile highlighted the intrinsic vulnerability of critical infrastructure when conflict breaks out. For example, water desalination plants – on which arid Gulf states are heavily dependent to supply homes, industry and agriculture with freshwater – have been among assets targeted in military attacks.7
Additionally, as defence systems hinge on physical and digital assets, there is a clear national security dimension to the resilience of infrastructure (from transport nodes to satellite systems) that could be vulnerable to attack or disruption.
Need gives rise to investment opportunities
Wide recognition of the imperative to invest more in the resilience of critical infrastructure should support opportunities for companies in four areas in particular.
First, power. The Iberian blackout of 2025 illustrates the challenge of maintaining grid stability with high, fluctuating renewable penetration when protection and voltage‑control systems have not kept pace. The importance of grid resilience is further amplified by rising electricity demand – including from the data centre build-out – which is pushing transmission and distribution networks beyond their original design parameters. Ageing grid infrastructure must be replaced: two-fifths of Europe’s grid equipment is more than 40 years old.8
Transmission system operators such as Belgian-listed Elia Group are undertaking substantial capital expenditure to improve grid resilience and expand capacity. Elia’s offshore Princess Elisabeth Island will bundle export cables from North Sea wind farms and connect them to Belgium and other markets via interconnectors.9 Grid expansions and upgrades support demand for manufacturers of critical grid components, like engineered transmission poles and substation structures manufactured by the likes of US-listed Valmont.
Second, water. It is estimated that water infrastructure spending needs to rise sixfold by 2040, to US$20tn, to maintain historic levels of water security amid increasingly erratic weather.10 Within this, around US$4tn is identified for investment in stormwater and flood management as more intense, more frequent deluges can inundate urban areas.
The need for cities and utilities to adapt to a changing climate should support opportunities for suppliers of hardware that diverts, stores and treats stormwater – including corrosion-resistant thermoplastic pipes and retention chambers – like US-listed Advanced Drainage Systems.
Third, transport. Rail and road infrastructure in Europe and North America is ageing: three-quarters of steel railway bridges in Europe are over 50 years old; one-third are over 100 years old.11 The vulnerability of 19th and 20th century transport infrastructure to climate change is highlighted by sustained weather-related damage to a coastal mainline railway in southwest England. Having collapsed into the sea in 2014 – prompting a two-month closure that cost the regional economy £1.2bn – landslip fears closed the line again this January.12
Major public investment programmes, including US$660bn under the bipartisan US Infrastructure Investment and Jobs Act and over €85bn from the EU’s Recovery and Resilience Facility, are funding enhancements to transport infrastructure.13 This supports opportunities for companies involved in its design, construction and management, as well as manufacturers of equipment and systems like US-listed Wabtec, which has recently signed deals totalling US$2bn to improve the reliability and efficiency of rail locomotives.14
Fourth, cybersecurity. Cyberattacks on critical infrastructure are rising in frequency and sophistication: in the year to August 2025, the number of ‘nationally significant’ attacks in the UK more than doubled.15 Amid escalating geopolitical tensions, the rise of cyber incidents against critical infrastructure is driving a dedicated market for security to protect industrial control systems. Unprotected, the financial risks are material: for major industrial operations, the average cost of downtime is estimated at US$450,000 an hour.16
With growing emphasis on cyber resilience from major governments, including the EU and UK, we perceive policy tailwinds for companies like US-listed Palo Alto Networks that are developing intrusion detection, segmentation and secure remote‑access tools tailored to the needs of critical infrastructure operators.17
Rising recognition of risks
Investments to enhance the resilience of infrastructure, both in design and in remediation, can often appear hard to justify where decision-makers extrapolate historical risk data or face short-term financial pressures. Such behaviour invariably leads to a misallocation of resources. For example, with rising risks, flood protection infrastructure like dykes and flood gates can be up to ten times more cost‑effective than post‑disaster reconstruction.18
Nevertheless, regulators are increasingly intolerant of poor preparation. UK water companies are now required to achieve resilience to 1-in-500-year droughts by 2040, for example.19 Asset owners meanwhile are leveraging tools like the IIGCC’s Climate Resilience Investment Framework to help ensure asset managers and investee companies identify physical climate risks and invest in adaptation.
Better informed adaptation and resilience strategies are being facilitated by increasingly accurate climate modelling and forecasting of extreme weather, assisted by AI. Rising demand from companies and investors alike for these models reflects the growing recognition of the need to allocate capital with a keener eye on risk. It also highlights the expanding opportunity set of innovative products and solutions that improve resilience and deliver financial value for asset owners.
1 McKinsey, September 2025: The infrastructure moment
2 American Society of Civil Engineers, 2025: 2025 Report Card for America’s Infrastructure
3 The University of Texas at Austin Energy Institute, 2021: The Timeline and Events of the February 2021 Texas Electric Grid Blackouts
4 Water Direct, April 2025: Business Interrupted: Understanding the Real Cost of Supply Interruptions
5 Swiss Re Institute, December 2025
6 Braw, E., 26 March 2025: Subsea sabotage puts European power at risk. Financial Times
7 Al Omran, A., et al., 9 March 2026: Gulf desalination plants emerge as new flashpoint in Iran war. Financial Times
8 European Council on Foreign Relations, October 2023: Gridlock: Why Europe’s electricity infrastructure is holding back the green transition
9 Elia, January 2026
10 Global Water Intelligence, May 2025: Rethinking Resilience: How a new era of extremes is changing how utilities invest
11 Dinas, A., Nikolaidis, T.N. & Baniotopoulos, C.C., 2017: Sustainable Restoration Criteria for a Historical Steel Railway Bridge. Procedia Environmental Sciences
12 Oates, M., 15 February 2026: The saga of a £165m rail line that keeps causing travel chaos. BBC
13 US Bureau of Transportation Statistics / International Association of Public Transport, February 2026
14 Bloomberg, February 2026. Deals with Union Pacific and CSX
15 National Cyber Security Centre, October 2025: UK experiencing four ‘nationally significant’ cyber attacks every week
16 Gartner estimates, quoted by Palo Alto Networks, 2026
17 EU Preparedness Union Strategy; UK National Security Strategy
18 Swiss Re, November 2024: Flood risk: protective measures up to ten times more cost-effective than rebuilding
19 Environment Agency, 2024: A summary of England’s revised draft regional and water resources management plans
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