A warranty is a commitment by a https://www.toptechno24.com seller or manufacturer that the products purchased are free of defects or faults for a specific length of time. In the area of technology M&A warranties are a standard tool to manage risks related to cybersecurity and data availability.

Data security warranties are becoming more popular among distributors. With ransomware set to cost businesses $265 billion in 2031 and an increase to attack every 2 seconds, it’s no surprise that they offer this new guarantee to their clients. These guarantees help reduce the financial risk of cyberattacks and breaches by shifting legal responsibility to the vendor, and are typically provided as an additional benefit to cybersecurity insurance, filling the gaps where insurance coverage might not be sufficient.

The exact terms of a security guarantee vary widely, but they typically contain a shortage of revenue for business in addition to additional expenses that are incurred as well as reputational damage arising from the incident. They may also include policies that is designed to cover legal responsibility which covers the costs of letting people affected by an attack to be identified as as any fines or charges incurred from lawsuits that could be filed.

While the concept behind a data security policy is a good one, many of them are not valid. Consider the case of Rubrik that offers a “Recovery Incident Warranty.” This warranty will pay for what they describe as “Recovery Incident expenses.” However, it doesn’t mean that your employees are getting paid for their time spent in a recovery situation. To allow Rubrik to reimburse you they must have receipts for these expenses, which is a red flag.