The Rise of Ransomware: What Every MSP Needs to Include in Client Contracts

Ransomware is more than just a threat. It has evolved into an epidemic. And for Managed Service Providers (MSPs), the stakes are especially high.

Cybercriminals often target MSPs as a way to infiltrate multiple clients through a single breach. It makes your business a prime target. Beyond the technical challenges, ransomware also creates legal and financial risks for MSPs.

Without the right contractual protections, you could be held responsible for damages resulting from these attacks, even when the root cause lies beyond your control.

In this blog, we’ll explore the critical clauses you must include in the MSP client contract for cybersecurity to mitigate ransomware risks and protect their business.

Why Ransomware Is a Unique Risk for MSPs

What keeps MSPs up at night are three core issues: vendor risk, regulatory compliance, and, most critically, the criminal acts of third parties like ransomware attacks. Here’s why.

1. Broad Impact Across Clients

A single ransomware attack on your systems could affect multiple clients, amplifying the damage and potential cybersecurity liability for MSPs. Traditional legal protections weren’t designed for this type of widespread, interconnected impact.

2. Blame for Client Failures

Clients often expect their MSPs to prevent all cybersecurity incidents, even when they ignore security advice or fail to implement recommended measures. This creates a dangerous accountability gap in the industry.

3. Regulatory Scrutiny

If sensitive data is compromised, you may face investigations under laws like GDPR, HIPAA, or CCPA, even if the breach wasn’t your fault. Each new regulation adds another layer of potential liability for MSPs, requiring constant vigilance and updates to compliance frameworks.

Key Contractual Protections for Ransomware Risks

To shield your MSP from ransomware-related liability, your client agreements should include the following provisions:

1. Exclude Liability for Criminal Acts

Make it clear that your MSP is not responsible for damages caused by ransomware attacks or other criminal acts beyond your control.

Example Clause:
“The MSP shall not be held liable for any damages, interruptions, or losses caused by the criminal acts of third parties, including ransomware, phishing attacks, or unauthorized access.”

2. Document and Limit Client Responsibilities

Clearly define what your clients must do to maintain their own cybersecurity, such as implementing security recommendations and training employees.

Example Clause:
“The client shall be solely responsible for maintaining a secure IT environment, including adhering to the MSP’s recommended security protocols, performing regular backups, and providing employee training on cybersecurity best practices.”

3. Include a Force Majeure Clause for Cyber Incidents

Protect your MSP from liability for service interruptions caused by events beyond your control, including ransomware attacks.

Example Clause:
“The MSP shall not be liable for failure to perform services due to events beyond its reasonable control, including but not limited to ransomware attacks, acts of cybercrime, or system outages caused by third parties.”

4. Use Indemnification Clauses for Client Negligence

Require clients to indemnify your MSP for damages resulting from their own failure to follow security advice or implement necessary protections.

Example Clause:
“The client agrees to indemnify and hold harmless the MSP from any claims, damages, or liabilities arising from the client’s failure to implement the MSP’s cybersecurity recommendations.”

5. Limit Your Financial Liability

Include a limitation of liability clause that caps your exposure in the event of a ransomware-related incident.

Example Clause:
“The MSP’s total liability for any damages, interruptions, or losses arising from ransomware or other cyber incidents shall not exceed the total fees paid by the client in the 12 months preceding the incident.”

Read more about MSP Vendor Liability & MSP Vendor Management Risks.

Operational Strategies to Support Contractual Protections

While contracts are critical, proactive cybersecurity measures can strengthen your ransomware risk management for MSPs:

1. Regular Risk Assessments: Evaluate your clients’ systems to identify vulnerabilities and recommend improvements. Maintain clear records of identified risks and your communications about them so the clients can’t claim that they weren’t informed of vulnerabilities.
2. Security Training: Offer client-focused training to help employees recognize and avoid ransomware threats. A comprehensive security program must address both the human and technical elements of ransomware protection for MSPs.
3. Backup and Recovery Plans: Ensure clients have robust backup solutions in place to minimize the impact of ransomware attacks. If you recommend backups to clients, there needs to be processes to confirm that the service is working as intended.

MSPs who maintain detailed records of security recommendations, client decisions, and implemented measures are better positioned to defend themselves against claims of negligence or breach of duty.

Read more about MSP Cybersecurity.

Why Dynamic Contracts Are Essential

Ransomware tactics evolve constantly, and so do regulatory requirements. Static contracts leave your MSP exposed to new risks. Dynamic agreements ensure your contracts:

• Stay aligned with emerging ransomware threats. What protected you last year may not be sufficient for tomorrow’s threats.
• Address evolving legal and compliance standards. Dynamic contracts allow you to stay current with these changes without having to completely rewrite your agreements each time new regulations emerge.
• Provide ongoing protection for your business. Modern ransomware MSP contracts must adapt to new threats, changing client relationships, and evolving service offerings.

A new approach that combines robust technical controls, clear client communication, and dynamic legal protection can evolve alongside the threats.

Read more about Strategic MSP Contracts.

The Monjur Advantage

At Monjur, we help MSPs protect their businesses from ransomware risks with tailored, dynamic contracts. Our Contracts-as-a-Service (CaaS) solution ensures your agreements are always up-to-date and designed to mitigate risks like ransomware.

Our approach combines deep legal expertise with modern technology to deliver protection that evolves alongside the threats facing MSPs.

Unlike traditional legal services that provide static documents, our platform enables continuous updates across your entire client base, ensuring consistent protection as threats and regulations change.

Don’t let ransomware put your business at risk. Contact us today to learn how Monjur can help safeguard your MSP with legally sound, risk-balanced agreements.