AI can future-proof infrastructure against natural disasters
A recent Deloitte report, AI for Infrastructure Resilience, warns that by 2050, the world could face up to the equivalent of $A705 billion in annual infrastructure damage from climate-related events. However, with smart implementation and timely action, AI could help prevent up to 15 per cent of these losses.
The urgency is especially clear in Australia. From bushfires and floods to coastal storm surges, extreme weather is already taking a toll on communities and critical infrastructure. As the government prepares to deliver a $120 billion infrastructure investment pipeline over the next decade, resilience can't be an afterthought — it needs to be embedded at every stage of the lifecycle.
That's where AI comes in.
When applied strategically through each stage of the infrastructure lifecycle, from planning to response and recovery, AI has the potential to radically strengthen infrastructure systems. In the design phase, for example, AI-powered digital twins enable planners to simulate climate scenarios and assess vulnerabilities to proactively prevent infrastructure failures.
Lisbon is already leading the way. The city used AI-enhanced modelling to simulate long-term flood risks and built a highly resilient drainage system designed to handle future climate conditions — helping to mitigate up to 20 floods over the next century. This is the kind of forward-looking approach Australia and other climate-exposed countries can learn from.
During a disaster, AI also plays a critical role. Advanced early warning systems (EWS), powered by real-time data and AI, can detect wildfires, floods and other hazards earlier and more accurately. According to the Australian National University, faster bushfire detection could help avoid between $A150 million and $A460 million in direct losses each year, depending on detection and response times.
Faster detection also reduces knock-on effects. The longer a fire burns undetected, the more it spreads — compounding the damage and increasing risks to human health from prolonged smoke exposure. AI can help contain these risks sooner, leading to better outcomes for people, ecosystems and public health systems alike.
AI's value doesn't stop when the emergency ends. In the post-disaster phase, AI can be applied to accelerate recovery. AI systems analyse satellite imagery and sensor data to pinpoint damage hotspots, prioritise repair efforts, and guide decision-making in real time. By enabling faster, more targeted responses, it helps communities rebuild stronger and faster, and ensures limited resources are deployed where they're needed most.
But as powerful as AI is, unlocking its full potential requires bold leadership and the removal of practical barriers like legacy infrastructure, regulatory gaps and financial constraints.
Policymakers have a pivotal role to play here. With AI evolving rapidly, regulatory frameworks must be flexible enough to keep pace. Prescriptive rules won't work in an environment where use cases are still emerging, and risks continue to evolve. Principles-based, flexible AI policy can provide the guardrails to foster innovation while ensuring safety, privacy, and trust.
Infrastructure owners and operators also need to take the lead — but not by rushing into large-scale AI overhauls. Instead, starting with targeted, high-impact projects like predictive maintenance, asset management improvements, or faster emergency response creates room to test, learn, and scale successful solutions.
Much of AI's potential hinges on the systems beneath the surface. Many legacy infrastructures lack the flexibility needed for real-time data, cross-platform integration, and AI interoperability. Upgrading to modular, adaptable IT frameworks is essential to unlock smarter, more resilient operations across the entire infrastructure landscape.
The financial sector and insurers share a key role in advancing AI-enabled infrastructure. Innovative financing tools like resilience bonds and targeted credit lines can unlock funding for these projects. At the same time, insurers can integrate AI into their offerings — creating products for AI-enabled assets, offering premium reductions for systems that help integrate trusted AI solutions, and improving risk models through advanced analytics. Together, they reduce investment risks, encourage AI adoption, and build more climate-resilient portfolios.
Behind it all are the technology providers themselves — the engine room of AI innovation. Their role goes well beyond algorithms. To make a measurable difference, they'll need to deliver integrated, scalable solutions that combine AI with other critical technologies, like the Internet of Things and digital twins.
Ultimately, this isn't just about rebuilding after disasters. It's about fundamentally rethinking how we prepare for them. If we want to protect lives, preserve ecosystems, and maintain the critical systems our society depends on, we can't afford to wait.
By applying AI to our infrastructure ecosystems today, we can not only reduce risk but actively build smarter, stronger, and more resilient communities ready to face a future that's anything but predictable.
Luke Houghton is Deloitte Australia Partner and National Leader, Infrastructure Sector.
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Disclaimer
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser.
Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ('DTTL'), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. Please see www.deloitte.com/au to learn more.
Copyright © 2025 Deloitte Development LLC. All rights reserved.
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