With data loss affecting a business every two seconds and expected to cost businesses $265 billion by 2031 It’s no wonder that more distributors are offering customers a brand new type of guarantee which is called the cybersecurity warranty. Designed to mitigate the monetary threats posed by cyberattacks and breaches They are typically a complement to cybersecurity insurance. They can help to fill in the gaps when insurance doesn’t offer security.
These warranties aren’t all the same. Some warranties have rigid conditions which can cost companies a amount of money to retrieve information in the event a cyber attack. These may include:
This kind of warranty could be included in the technology M&A agreement to ensure that the buyer is protected from potential security threats and that the vendor takes steps to safeguard against future attacks. In addition to the normal representations and warranties in an asset or stock purchase agreement, these new warranties can be bargained to address privacy issues concerns, data security, as well as other relevant issues specific to the transaction being considered.
A typical warranty will cover the cost to repair and replace hardware, the cost for IT labor, forensics, and also compensation for people affected by the breach. Some also cover the cost of legal fees resulting from lawsuits. A more comprehensive version may also cover lost revenue and the cost of programming the software and the cost to repair reputational damage caused by an incident of security.
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