Ransomware a growing threat to governments

An ongoing cyberattack on Costa Rica’s government highlights the growing risk of ransomware generally, and the threat to sovereigns, says Fitch Ratings.

On May 8, Costa Rica’s new president declared a national emergency due to a continuing cyberattack that began in mid April and has disrupted tax collection, import-export systems, and the payment of public sector employees. A Russia-based international criminal group, Conti, has claimed responsibility for the attack.

In a new report, the rating agency said that the cyberattack, “highlights risks to sovereigns that could increase as such attacks become more common.”

Fitch said that while governments have numerous departments that could be attacked by hackers, the most important from a credit rating perspective are the treasury/finance ministry and the central bank.

The attack on Costa Rica has targeted the finance ministry, disrupting tax revenues and slowing cross-border trade, but it has not interrupted its sovereign debt payments — which is the sort of event that, Fitch said, could lead to a credit downgrade.

“Conti has reportedly indicated that it may engage in more ransomware attacks on other sovereigns, and we think such attacks will become more common,” Fitch said.

Emerging markets with weaker cyber defences are likely to be “relatively vulnerable” to these kinds of threats, Fitch noted.

“Costa Rica’s experience so far also suggests that operational risk management, for example, via business continuity plans, can reduce the risk that a cyber-attack delays debt servicing,” it said.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.