Heads Up CEO! Cyber Risk Influences Company Credit Ratings

More than ever, cybersecurity strategy is a core part of business strategy. For example, a company’s cyber risk can directly impact its credit rating. 

Credit rating agencies continuously strive to gain a better understanding of the risks that companies face. Today, those agencies increasingly incorporate cybersecurity into their credit assessments. This allows agencies to evaluate a company’s capacity to repay borrowed funds by factoring in the risk of cyberattacks.

Getting Hacked Impacts Credit Scoring

As per the Wall Street Journal (WSJ), credit-rating agencies are placing greater emphasis on how companies handle cyberattacks. Cybersecurity has now become part of the assessment of creditworthiness. S&P Global Ratings analysts have revealed that companies and government agencies affected by cyberattacks have been downgraded due to IT outages, as well as the financial impact of the attacks. 

Moody’s Investors Service and Fitch Ratings have also highlighted the dangers of cyber risks. In the event of a cyberattack, some financial consequences may be immediately apparent. Others may take months to materialize and could impact an organization’s ability to repay its debts. 

Real-World Credit Rating Impact

Following the SolarWinds cyberattack in 2020, the company was downgraded by S&P from a B+ to a B rating. S&P’s associate director for corporate ratings, Minesh Shilotri, praised SolarWinds for its clear communication and speedy provision of security fixes to customers after the attack, as per the WSJ. However, the software company still suffered from the loss of clients and increased investment in security spending.

Even when companies work quickly to respond to cyberattacks, transparency and communication are vital. Credit rating agencies expect compre ..

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