Operating a small business in one of the most beautiful places on the planet can be paradise, but this decision poses certain risks. Business owners in Hawaiʻi share many of the same risk factors as businesses elsewhere, especially cybersecurity risks. However, they also encounter risks that are particularly common in the region, such as volcanoes, earthquakes, floods, and hurricanes. Developing the right risk and insurance strategies can help your business prevent major financial losses and recover faster after a covered event.
Addressing Common Small Business Risks in Hawaiʻi
When approaching the topic of risk management, it’s important to consider what local risks may apply to your business. Hawaiʻi is greatly impacted by tourism fluctuations with millions of people visiting the islands each year. During peak tourist seasons, the risk of theft, vandalism, and accidents can skyrocket.
Hawaiʻi is also prone to natural disasters, which generally require additional coverage. Most standard business insurance policies do not cover incidents such as floods, meaning specialized policies are needed to protect you from unexpected costs associated with those events.
Customized Insurance Coverage
A recent study revealed that 75% of small businesses in the U.S. do not have sufficient insurance. When underinsured, companies are financially responsible for any claims that extend beyond the insurance limit, which could be devastating for small businesses with budget constraints.
When building a custom insurance package to protect against risks, consider the following:
- Casualty Insurance – Common types of casual insurance include cyber liability, directors & officers, employment practices, and general liability.
- Property Insurance – Choose types of property insurance that fit your needs, such as builders’ risk, cargo, crime, and income insurance.
- Umbrella Insurance – With umbrella insurance, small businesses are protected against claims that exceed certain liability policy coverage limits.
Businesses must always carry specific policies that are legally required. In Hawaiʻi, state law requires businesses to have workers’ compensation insurance if they have one or more employees, part-time or full-time, and all business-owned vehicles must be covered by commercial auto insurance.
Disaster Preparedness Planning
Having a proper disaster preparedness plan can be the difference between a business recovering after an emergency or being forced to shut down permanently. There are several important steps involved in creating a disaster preparedness strategy, starting with risk identification.
Determine which disasters are the biggest threat to your small business, whether this includes floods, wildfires, earthquakes, or other events. Next, develop a plan that you can put into effect in the event of a disaster.
The plan should address how to keep employees safe, how to secure hazardous supplies, and how to keep the business running. Once the plan has been finalized, the process doesn’t stop there. You’ll want to reevaluate and modify the plan over time as the business grows and risk levels change.
Cybersecurity Measures
An important component of risk management involves creating and implementing cybersecurity measures. Cybersecurity measures should include training employees on how to handle customer information and other sensitive data.
Businesses should also carry out regular risk assessments to determine what potential risks could compromise the security of the company’s systems, networks, and information. Keep your security team’s training current and make sure that software and systems are kept up-to-date to help prevent security gaps.
Financial Management
Financial management should also be considered when addressing risk management. Carefully review your budget and allocate funds for potential emergencies. Building an emergency fund can help create a financial cushion for your small business in the event of unexpected expenses.
Make consistent contributions to the fund to grow it over time. Emergency funds should be kept in a liquid and easily accessible account to make them available when needed.
Legal and Compliance Issues
Small business risks can also occur in the form of legal disputes and similar troubles. As part of your risk management strategy, identify and plan for important legal areas so that your business continues to maintain compliance with appropriate legal entities.
Ensure all contracts, whether with clients, partners, or suppliers, are clear and detailed. Include legal provisions that will help protect your business in the case of breaches, conflicts, or emergencies.
Take time to understand local requirements, such as licenses and permits, needed to legally operate your business in Hawaiʻi. Keep track of renewal dates as non-compliance can result in hefty fines and penalties.
Atlas Offers Risk Control & Claims Management Consulting
All small businesses have some level of risk but it’s how you address these risks that may impact your company’s long-term survival. As the largest and most established insurance agency in Hawaiʻi, Atlas Insurance has built a reputation for transparency and exceptional broker expertise.
Let our team of risk control and claims management consultants assess your business risks and build an insurance package that meets your specific needs.