Data loss is expected to cost businesses $265 billion by 2031. It’s no surprise that more distributors offer buyers a new type of warranty called the cybersecurity warranty. These warranties are designed to minimize the financial risk of cyberattacks and are often a complement to insurance. They fill in the gaps left by insurance.
However these warranties aren’t created in the same way. Certain warranties have strict terms that can cost companies a lot of money to retrieve information in the event a cyber attack. These stipulations can include:
Incorporating this type of warranty into a technology M&A deal is an excellent way to make sure that the buyer has adequate protections against security threats that could be a threat, and that the vendor will take measures to prevent such attacks from occurring in the future. These new warranties are in addition to the usual representations and warranty clauses that are included in an asset purchase agreement or stock purchase contract, can be negotiated so that they address privacy, data protection, and other relevant concerns specific to the transaction.
A typical warranty covers the cost to repair and replace hardware, the cost of IT labor, forensics, and also compensation for people affected by a breach. Some also cover the costs of legal expenses that result from https://www.toptechno24.com/intensive-complex-performance-with-virtual-data-room potential lawsuits. A more comprehensive policy could also cover lost business revenue and the cost of reprogramming software as well as the cost of repairing reputational damage resulting from an incident of security.
