The Truth About Data Safety Warranties in Technology M&A

A warranty is a promise by a seller or manufacturer that the product purchased is free of defects or faults for a specified period of time. In the context technology M&As warranties are typically used to address security and data availability risk.

With ransomware moves required to target a company each two seconds and estimated to cost businesses $265 billion in 2031, it’s no surprise that more distributors are offering their customers a brand new sort of guarantee called a data safety guarantee. These guarantees lower the financial dangers of cyberattacks and breaches by transferring legal responsibility to the seller, and are typically provided in conjunction with cybersecurity insurance, assisting in filling the gaps when insurance coverage might not be enough.

The specifics of a security assurance vary significantly, but they typically comprise a deficiency in business revenue, extra expenses incurred and reputational damage arising from an incident. They may also contain policies meant for legal responsibility, which covers the expenses of letting people affected by an attack to be identified as as any penalties or fines resulting from potential lawsuits.

However, while the basic concept behind a data safety assurance is sound, a lot of them have serious weaknesses. Rubrik offers the “Recovery Incident warranty” that pays for “Recovery Incident-related expenses.” However this doesn’t mean that your employees will get paid for the time they spend in a recovery. For Rubrik to pay up they’ll need receipts for these expenses, which is an indicator.


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