On Cyber Warranties

2020-03-26 11:27

Only cyber-incident warranties cover first-party costs from cyber-attacks - why all such warranties were offered by firms selling intangible products is an open question.

Consumers should question whether warranties can function as a costly signal when narrow coverage means vendors accept little risk.

. Theoretical work suggests both the breadth of the warranty and the price of a product determine whether the warranty functions as a quality signal.

In conclusion, cyber warranties - particularly cyber-product warranties - do not transfer enough risk to be a market fix as imagined in Woods.

The most valuable feature of warranties is in preventing vendors from exaggerating what their products can do.

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https://www.schneier.com/blog/archives/2020/03/on_cyber_warran.html