With data loss affecting a business every two seconds and expected to cost businesses $265 billion by 2031, it’s no wonder more distributors are offering customers a brand new type of guarantee: the cybersecurity warranty. These warranties are designed to lower the financial risk related to cyberattacks, and often serve as a complement to insurance. They fill in the gaps left by insurance.
These warranties aren’t all the same. Many experience rigid stipulations that may keep companies paying a substantial amount for information retrieval in the case of cyber-attacks. The stipulations can include:
This type of warranty could be included pop over here in a technology M&A agreement to ensure that the buyer is adequately protected from potential security threats and that the vendor takes steps to safeguard against future attacks. In addition to the typical warranties and representations in an asset purchase agreement, these warranties can be negotiated to address privacy security, data security, and other relevant issues that are specific to the deal at hand.
A typical warranty covers the cost to repair and replace hardware, the cost of forensics, IT labor, and compensation for those affected by a breach. Some warranties also cover legal costs caused by lawsuits. A more comprehensive version might also cover lost business revenue and the cost of reprogramming software as well as the cost of repairing reputational damage that results from a security event.