The Truth About Data Safety Warranties in Technology M&A

A warranty is a promise from a manufacturer or seller that goods purchased are free of defects or imperfections for a specific length of time. In the context technology M&As, warranties are often employed to mitigate security and data availability risks.

With ransomware threats requiring to strike a business every two seconds, and projected to expense businesses $265 billion by 2031, it’s not a surprise that more distributors are providing their customers with a brand new kind of assurance called a data safety guarantee. These guarantees limit the financial risk that are associated with cyberattacks by transferring legal liability to the company. They are typically offered as a supplement to cybersecurity insurance to cover gaps in coverage that may not be sufficient.

The exact terms of a security guarantee vary in a variety of ways, but they generally contain a shortage of revenue for business along with additional costs incurred and reputational damage arising from the breach. The policy could also cover legal liability. This covers the costs of notifying people affected by an attack as well as any fines or charges arising from potential lawsuits.

While the concept behind a security warranty for data is an excellent one, the majority of them are faulty. Rubrik offers the «Recovery Incident warranty» that pays for «Recovery Incident costs.» However it doesn’t mean your employees will be compensated for the time spent on recovering. Rubrik will only pay the expenses if they have receipts for the expenses. This is a small red signal.

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