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A warranty is a commitment from a seller or a manufacturer that the products purchased are free of defects or flaws for a specific length of time. In the context technology M&As warranties are typically employed to mitigate cybersecurity and data availability risks.

With ransomware attacks expected to target a company each 2 seconds and predicted to expense businesses $265 billion in 2031, it’s not a surprise that more distributors are offering their customers with a new sort of guarantee called a data safety guarantee. These guarantees minimize the risk of economic loss associated cyberattacks by transferring legal liability to the vendor. They are typically offered as an addition to cybersecurity insurance to cover gaps where insurance coverage might not be sufficient.

Security assurances vary widely in their details and typically include the loss of revenue for businesses and the additional expenses that are incurred and reputational damage that is caused by an attack. The policy could also cover legal liability. This covers the cost of notifying people affected by an attack, as well as any fines or charges arising from potential lawsuits.

But while the underlying idea behind a data safety warranty is good, many of them have serious shortcomings. Rubrik offers an “Recovery Incident warranty” that covers “Recovery Incident costs.” However it does not mean that your employees will be paid for time spent in a recovery. Rubrik will only pay if they have receipts for the expenses. This is a red flag.

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