Data Safety Warranties – Are All Cybersecurity Warranties Created Equal?

With data loss affecting companies every two seconds and expected to cost businesses $265 billion by 2031, it’s not surprising that distributors are offering buyers the most recent kind of warranty which is the cybersecurity guarantee. These guarantees are designed to limit the economic risk caused by cyberattacks. They remove the liability of the vendor, oftentimes covering the gaps where insurance may not be able to cover a loss.

But, just like other warranty that are offered, not all cybersecurity guarantees are alike. Certain warranties have strict conditions that can cost your company many dollars when you don’t know the fine terms. For instance, the majority of technology warranties limit payment by the amount that the vendor spent on their solution. This isn’t a good idea since the value of one record in your Cohesity FortKnox might be much more than the total amount spent on license costs with a specific technology vendor.

This is a major red flag because the cost of losing productivity of employees can be higher than the total amount of time the software was utilized during the time. This is a huge alarm because the price of lost productivity by employees could be much more costly than the total amount of time that the software was utilized during that period. This is why including representations and warranties that focus on the lawful processing of data up to the smallest part of a exchanging business documentation business will help minimize the risk of financial loss during M&A transactions.