With data loss impacting a company every second and estimated to cost businesses $265 billion by 2031, it’s no wonder more distributors are providing buyers with the latest kind of warranty which is the cybersecurity guarantee. These warranties are designed to mitigate the financial risk of cyberattacks, and shift liability to the vendor. They are often used to fill in the gaps left by insurance.
However there are many different warranties for cybersecurity are created equal. Some warranties have rigid conditions that can cost your business lots of money when you don’t know the fine details. For instance, most warranties on technology limit payments by the amount that the company spent on their solution. This isn’t helpful as the value of one record in your Cohesity FortKnox might be much greater than the total amount spent on license costs with a particular technology vendor.
This is a huge red flag as the cost of losing productivity of employees could be higher than the total amount of time the software was utilized during the period. This is a red flag since the cost of loss of productivity of employees could be much higher than the time spent using the software during that period. In this way, including representations and warranties that focus on the legal processing of data right down to the smallest part of a business could help to reduce the risk of financial loss during M&A transactions.