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Examination of State-Level Risks to Private Assets

Egan-Jones Ratings Co. recently released a comprehensive analysis investigating the implications of state-level conflicts on private commercial assets. In the context of evolving military technology, specifically the rapidly decreasing costs associated with long-range attacks, such as those initiated by Ukraine against Russian targets, the firm explores how this reality poses significant risks for privately held enterprises.

Rising Risks in a Changing Conflict Landscape

The firm underscores how deterrence among nuclear-armed states remains largely intact; however, the financial implications of inflicting damage have drastically changed. For instance, drones priced around $2,000 have managed to render substantial destruction, leading to the incapacitation of almost a third of Russia’s strategic cruise missile carriers during Ukraine’s Operation Spiderweb in June 2025. Notably, the range of these attacks has improved dramatically, evidenced by a July 2026 strike on the Omsk refinery from nearly 2,500 kilometers away, far exceeding previous operational limits.

Commercial infrastructure is by no means immune to these threats. Between July 18 and August 4, 2026, drones successfully targeted at least sixteen Wildberries facilities across fourteen regions. Wildberries is a significant player in the Russian market, accounting for approximately 45% of the country's online commerce. The total area affected in just 18 days reached about 2 million square meters, a figure comparable to 4% of the space Amazon reported in its latest annual filing.

Financial Repercussions for Credit Investors

A crucial aspect of Egan-Jones's analysis is the travel of financial losses through the commercial ecosystem. Eleven days ahead of the initial drone strikes, Wildberries altered its terms of service to disclaim liability for damages incurred from force majeure events. Consequently, this change shifted the financial burden onto the thousands of merchants using the platform, which stirred concerns within the lending community about the repercussions of such losses on credit liabilities associated with dispersed borrowers.

Insurance providers, as highlighted in the report, have also felt the pinch, absorbing some costs but ultimately failing to cover the entire deficit, leaving small vendors vulnerable to significant operational threats.

The examination doesn't shy away from challenging the foundational assumptions of risk management in asset-heavy enterprises. Egan-Jones raises an essential question: have these businesses genuinely reviewed their exposure to state-level risks, considering the ever-increasing chances of collateral damage arising from military actions?

Key Considerations in Risk Management

In the full report, Egan-Jones delineates critical areas that businesses should document to mitigate potential losses. These include site concentration risks, replacement time for assets, exclusions concerning war and hostile acts, loss allocation clauses, and counterparty pass-through implications.

The firm posits that a pivotal indicator for businesses is whether particular product lines or contracts could classify them as supporting a nation’s military operations. For instance, Wildberries became a target after its catalog was found to list drone components, thus marking it as a participant in military logistics.

In summary, Egan-Jones concludes that while deterrence hasn't failed among state actors, the consequences of conflicts now extend to parties that might not directly face the brunt of an attack. The analysis serves as a critical reminder for stakeholders in private positions to reassess their vulnerabilities in an increasingly volatile geopolitical landscape, pushing for due diligence and adaptive risk management strategies.