A warranty is an assurance from a manufacturer or seller that the product purchased will not have defects for a specified time. In the context of M&As in technology they are typically employed to mitigate security and data availability risk.
Security warranties for data are becoming more popular with distributors. With ransomware projected to cost businesses $265 billion by 2031 and a move to attack every two seconds, it’s no surprise that they offer this new guarantee to their customers. These guarantees limit the financial risk associated cyberattacks by transferring the legal responsibility to the seller. They are usually offered as a supplement to cybersecurity insurance to fill in the gaps where coverage may not be sufficient.
Security guarantees vary in their details and typically include the loss of revenue for a company as well as additional costs incurred and reputational damage resulting from the breach. The policy could also cover legal responsibility. This covers the costs https://www.toptechno24.com/intensive-complex-performance-with-virtual-data-room of contacting those affected by an attack as well as any fines and charges resulting from lawsuits.
While the idea behind a data security warranty is a good one, many of them are flawed. Rubrik offers the “Recovery Incident warranty” that covers “Recovery Incident costs.” However it does not mean that your employees will get paid for the time they spend in recovering. In order for Rubrik to cover the cost, they need receipts for these expenses which is a bit of a red flag.