Fitch Ratings alerts companies to loss of value after cyber incident

Fitch Ratings last week issued a warning for “material risk” at water and sewage utilities because of cyber attacks – which could also affect its ability to pay debts. Fitch is one of the three major global credit rating agencies (the other two are Moody’s and Standard & Poor’s).

The agency made an assessment of the resilience of American water and sewage utilities in unexpected events, including cyber attacks, “which can pose financial and operational risks, and even the credit quality of critical infrastructure.” In the alert, the company warns that “management and governance are usually credit neutral, but can be considered negative if utilities are unable to adequately manage cyber risk or if there are concerns related to transparency, communication or reputation damage. after a cyber attack ”.

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The alert adds that “unexpected costs related to cyber breaches can weaken liquidity metrics and restrict the assessment of a dealership’s overall financial profile according to Fitch’s criteria. Emergency efforts to combat cyber attacks can reduce cash reserves and / or increase operating expenses by decreasing funds available for debt service. Unforeseen debt financing to support cyber infrastructure or capitalize on cyber losses can also weaken leverage indicators. ”

Finally, the agency notes: “Cyber ​​breaches can also present challenges to a dealership’s ability to preserve revenue generation and recover costs in a timely manner. The loss or corruption of customer data, electronic files and accounts that leads to an inability to read meters or access billing systems and reduces customer confidence can affect the ability to increase fees. Data loss or corruption can also impair a utility’s ability to monitor its own systems and provide timely and quality data to regulators and customers. Concessionaires may face possible regulatory action for violating regulations or lawsuits from other constituents, which may result in unexpected financial charges ”.

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