There is no precise formula for calculating credit risks associated with terrorism, said Standard & Poor’s chief quality officer for industrial ratings, Solomon Samson, at today’s McGraw-Hill Companies Homeland Security Summit and Exposition.

“Many factors go into a credit rating, which are not based on algorithms or solely on financial statistics,” Samson said at the Washington, D.C., summit. “In addition to analysis of facts and figures, a credit rating is based on subjective analysis of industry and company fundamentals, mixed with a healthy dose of pragmatism.”

Samson explained that Standard & Poor’s determines risk for industries prone to attack and subsequent economic stress on an individual basis. “Some in the credit markets are under the impression that any company that does not have terrorism insurance will automatically be downgraded,” Samson said. “That is certainly not Standard & Poor’s position. We continue to rate companies based on judgment regarding each specific situation.”

Simply because a company could be a target of terrorism does not automatically mean its rating would be affected, Samson said. “First of all, we do not rate by a worst-case scenario. Second, a company may have hundreds of plants, which mitigates the impact of losing a single asset.”