A warranty is a guarantee from a manufacturer or seller that the goods purchased will be free of defects for a particular period of time. In the context of M&As in technology warranties are frequently used to manage the risks of cybersecurity and availability of data.
Data security guarantees are becoming more popular with distributors. With ransomware expected to cost businesses $265 billion in 2031 and an increase to attack every two seconds, it’s no surprise that they offer this new assurance to their clients. These guarantees minimize the risk of economic loss caused by cyberattacks, as they transfer the legal responsibility to the seller. They are usually offered as a supplement to cybersecurity insurance to fill in the gaps where insurance coverage might not be sufficient.
Security guarantees vary in https://toptechno24.com/board-meeting-minutes-legal-requirements-to-achieve-in-board-of-directors-software terms of their specifics and typically include the loss of revenue for businesses, additional expenses incurred, and reputational damage resulting from a breach. The policy could also cover legal liability. This covers the costs of notifying the affected parties about an attack and any penalties and fines resulting from lawsuits that could be filed.
While the concept behind a data security warranty is an excellent one, a lot of them are flawed. Take the example of Rubrik that provides a “Recovery Incident Warranty.” This warranty will pay for what they describe as “Recovery Incident Expenses.” However, it doesn’t mean that your employees will be compensated for the time they spent on a recovery event. For Rubrik to cover the cost, they need receipts for these expenses, which is a bit of a red flag.