With data loss impacting a company every two seconds and expected to price businesses $265 billion by 2031, it’s no wonder distributors are now providing buyers with the latest kind of warranty which is the cybersecurity guarantee. These warranties are intended to reduce the financial risks of cyberattacks and eliminate any liability that is transferred to the vendor, usually to fill in the gaps where insurance could not cover a particular damage.
But, just like other warranty there are different cybersecurity warranties. Not all are all created equal. Certain warranties come with strict conditions which could leave your business paying a high cost for information being returned, especially if you’re not aware of the fine print. The majority of technology warranties, for example have a limit on the amount of money you pay based on the amount of money that the company invested in their product. This isn’t a good idea since the value of a single entry in your Cohesity FortKnox might be much more than the total amount of money spent on licensing fees with a particular technology vendor.
For instance, if you’re an existing Rubrik customer and you’re not able recover your data because of an attack with ransomware the warranty will compensate for what they call “Recovery Incident Costs.” However they need receipts for the number of hours staff members spend on the recovery incident. This is a red flag because the cost of lost productivity by employees could be more than the time they spent using the software during that period. This is why including representations and warranties that are focused on the legal processing of data right down to the smallest division of a business could help to reduce the risk of financial loss during M&A transactions.