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With data loss affecting an organization every second and estimated to price businesses $265 billion by 2031, it’s not surprising that distributors are providing buyers with the latest kind of warranty one of which is the cybersecurity warranty. These guarantees are designed to limit the economic consequences of cyberattacks, and shift responsibility to the vendor. They often fill in the gaps left by insurance.

However, as with any other warranty, not all cybersecurity warranties are made equal. Certain warranties have strict stipulations which could leave your business paying a substantial amount for information being returned, especially if you’re not aware of the specifics. Most warranties on technology, for example, limit payment based upon how much the provider invested in their solution. This isn’t a good idea since the value of a single entry in your Cohesity FortKnox might be much more than the sum spent on license costs with a specific technology vendor.

For instance, if you’re a Rubrik customer and are not able retrieve your data due to the threat of ransomware their warranty will pay for what they call “Recovery Incident Expenses.” However, they require receipts for the number of hours that staff members devote to the recovery process. This is a red flag because the cost of lost productivity of employees could be much higher than the time they spent using the software over that period. This is why including representations and warranties that focus on the lawful processing of data right down to the most remote part of a business could help to reduce the risk of costly losses during M&A transactions.