Data loss is estimated to cost businesses $265 billion by 2031. It’s no surprise that more distributors offer customers the latest type of warranty, the cybersecurity warranty. It is designed to reduce the financial threats posed by cyberattacks and breaches they are generally an addition to cybersecurity insurance. They can help to fill in the gaps when insurance doesn’t offer protection.
These warranties aren’t all the same. Certain warranties come with strict terms that can cost companies considerable amount of money to recover information in the event of a cyber attack. These stipulations could include:
Incorporating such a warranty into a technology M&A deal can be an excellent way to make sure that the buyer is adequately protected against security threats that could be a threat, and that the vendor will take steps to stop such attacks from occurring in the future. These new warranties in addition to the standard representations and warranty clauses that are included in an asset purchase agreement or stock purchase contract, could be negotiated so that they cover privacy, data protection as well as other concerns specific to the transaction.
A typical warranty can include the cost of fixing and replacing hardware and equipment, the cost of forensics or IT labor to recover data, and the cost of compensating people who are affected by a breach. Some also cover the costs of legal expenses that result from potential lawsuits. A more comprehensive plan could also cover lost business revenues, the costs of reprogramming software and cost to repair reputational damage caused by an incident of security.