businessballs contingency plan

Enterprises are often defined by how they deal with events that are out of their control. For example, how you react to a disruptive technology or cope with a sudden change in the markets can be the difference between success and failure.

Contingency planning is the art of preparing for the unexpected. But where do you start and how do you separate the threats that could do real harm to your business from the ones that aren’t as critical?

Here are some important definitions, best practices and strong examples to help you build contingency plans for whatever your business faces.

What is a contingency plan?

Business contingency plans, also known as “business continuity plans” or “emergency response plans” are action plans to help organizations resume normal business operations after an unintended interruption. Organizations build contingency plans to help them face a variety of threats, including natural disasters, unplanned downtime, data loss, network breaches and sudden shifts in customer demand.

A good place to start is with a series of “what if” questions that propose various worst-case scenarios you’ll need to have a plan for. For example:

• What if a critical asset breaks down, causing delays in production?
• What if your top three engineers all quit at the same time?
• What if the country where your microprocessors are built was suddenly invaded?

Good contingency plans prioritize the risks an organization faces, delegate responsibility to members of the response teams and increase the likelihood that the company will make a full recovery after a negative event.

Five steps to build a strong contingency plan

1. make a list of risks and prioritize them according to likelihood and severity..

In the first stage of the contingency planning process, stakeholders brainstorm a list of potential risks the company faces and conduct risk analysis on each one. Team members discuss possible risks, analyze the risk impact of each one and propose courses of action to increase their overall preparedness. You don’t need to create a risk management plan for every threat your company faces, just the ones your decision-makers assess as both highly likely and with a potential impact on normal business processes.

2. Create a business impact analysis (BIA) report

Business impact analysis (BIA) is a crucial step in understanding how the different business functions of an enterprise will respond to unexpected events. One way to do this is to look at how much company revenue is being generated by the business unit at risk. If the BIA indicates that it’s a high percentage, the company will most likely want to prioritize creating a contingency plan for this business risk.

3. Make a plan

For each potential threat your company faces that has both a high likelihood of occurring and a high potential impact on business operations, you can follow these three simple steps to create a plan:

• Identify triggers that will set a plan into action: For example, if a hurricane is approaching, when does the storm trigger your course of action? When it’s 50 miles away? 100 miles? Your teams will need clear guidance so they will know when to start executing the actions they’ve been assigned.
• Design an appropriate response: The threat your organization prepared for has arrived and teams are springing into action. Everyone involved will need clear, accessible instructions, protocols that are easy to follow and a way to communicate with other stakeholders.
• Delegate responsibility clearly and fairly: Like any other initiative, contingency planning requires effective project management to succeed. One proven way to address this is to create a RACI chart . RACI stands for responsible, accountable, consulted and informed, and it is widely used in crisis management to help teams and individuals delegate responsibility and react to crises in real time.

4. Get buy-in from the entire organization—and be realistic about cost

Sometimes it can be hard to justify the importance of putting resources into preparing for something that might never happen. But if the events of these past few years have taught us anything, it’s that having strong contingency plans is invaluable.

Think of the supply chain problems and critical shortages wreaked by the pandemic or the chaos to global supply chains brought about by Russia’s invasion of Ukraine. When it comes to convincing business leaders of the value of having a strong Plan B in place, it’s important to look at the big picture—not just the cost of the plan but the potential costs incurred if no plan is put in place.

5. Test and reassess your plans regularly

Markets and industries are constantly shifting, so the reality that a contingency plan faces when it is triggered might be very different than the one it was created for. Plans should be tested at least once annually, and new risk assessments performed.

Contingency plan examples

Here are some model scenarios that demonstrate how different kinds of businesses would prepare to face risks. The three-step process outlined here can be used to create contingency plans templates for whatever threats your organization faces.

A network provider facing a massive outage

What if your core business was so critical to your customers that downtime of even just a few hours could result in millions of dollars in lost revenue? Many internet and cellular networks face this challenge every year. Here’s an example of a contingency plan that would help them prepare to face this problem:

• Assess the severity and likelihood of the risk: A recent study by Open Gear showed that only 9% of global organizations avoid network outages in an average quarter. Coupled with what is known about these attacks—that they can cause millions of dollars in damage and take an immeasurable toll on business reputation—this risk would have to be considered both highly likely and highly severe in terms of the potential damage it could do to the company.
• Identify the trigger that will set your plan in action: In this example, what signs should decision-makers have watched for to know when a likely outage was beginning? These might include security breaches, looming natural disasters or any other event that has preceded outages in the past.
• Create the right response: The organization’s leaders will want to determine a reasonable recovery time objective (RTO) and recovery point objective (RPO) for each service and data category their company faces. RTO is usually measured with a simple time metric, such as days, hours or minutes. RPO is a bit more complicated as it involves determining the minimum/maximum age of files that can be recovered quickly from backup systems in order to restore the network to normal operations.  

A food distribution company coping with an unexpected shortage

If your core business has complex supply chains that run through different regions and countries, monitoring geopolitical conditions in those places will be critical to maintaining the health of your business operations. In this example, we’ll look at a food distributor preparing to face a shortage of a much-needed ingredient due to volatility in a region that’s critical to its supply chain:

• Assess the severity and likelihood of the risk: The company’s leaders have been following the news in the region where they source the ingredient and are concerned about the possibility of political unrest. Since they need this ingredient to make one of their best-selling products, both the likelihood and potential severity of this risk are rated as high.
• Identify the trigger that will set your plan in action: War breaks out in the region, shutting down all ports of entry/exit and severely restricting transport within the country via air, roads and railroads. Transportation of their ingredient will be challenging until stability returns to the region.
• Create the right response: The company’s business leaders create a two-pronged contingency plan to help them face this problem. First, they proactively search for alternate suppliers of this ingredient in regions that aren’t so prone to volatility. These suppliers may cost more and take time to switch to, but when the overall cost of a general production disruption that would come about in the event of war is factored in, the cost is worth it. Second, they look for an alternative to this ingredient that they can use in their product.

A social network experiencing a customer data breach

The managers of a large social network know of a cybersecurity risk in their app that they are working to fix. In the event that they’re hacked before they fix it, they are likely to lose confidential customer data:

• Assess the severity and likelihood of risk: They rate the likelihood of this event as high , since, as a social network, they are a frequent target of attacks. They also rate the potential severity of damage to the company as high since any loss of confidential customer data will expose them to lawsuits.
• Identify the trigger that will set your plan in action: Engineers make the social network’s leadership aware that an attack has been detected and that their customer’s confidential information has been compromised.
• Create the right response: The network contracts with a special response team to come to their aid in the event of an attack and help them secure their information systems and restore app functionality. They also change their IT infrastructure to make customer data more secure. Lastly, they work with a reputable PR firm to prepare a plan for outreach and messaging to reassure customers in the event that their personal information is compromised.

The value of contingency planning 

When business operations are disrupted by a negative event, good contingency planning gives an organization’s response structure and discipline. During a crisis, decision-makers and employees often feel overwhelmed by the pile-up of events beyond their control, and having a thorough backup plan helps reestablish confidence and return operations to normal.  

Here are a few benefits organizations can expect from strong contingency plans:

• Improved recovery times: Businesses with good plans in place recover faster from a disruptive event than companies that haven’t prepared.  
• Reduced costs—financial and reputational: Good contingency plans minimize both financial and reputational damage to a company. For example, while a data breach at a social network that compromises customer information could result in lawsuits, it could also cause long-term damage if customers decide to leave the network because they no longer trust the company to keep their personal information safe.
• Greater confidence and morale: Many organizations use contingency plans to show employees, shareholders and customers that they’ve thought through every possible eventuality that might befall their company, giving them confidence that the company has their interests in mind.

Contingency plan solutions

IBM Maximo Application Suite is an integrated cloud-based solution that helps businesses respond quickly to changing conditions. By combining the power of artificial intelligence (AI) , Internet of Things (IoT) and advanced analytics, it enables organizations to maximize the performance of their most valuable assets, lengthen their lifespans and minimize costs and downtime.

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Why Having a Contingency Plan Is So Important — and How to Develop an Effective One Let's discuss the importance of contingency planning, what a comprehensive contingency plan should include and how to implement one effectively.

By Greg Davis Edited by Chelsea Brown Apr 27, 2023

Opinions expressed by Entrepreneur contributors are their own.

In today's ever-changing business environment, business owners, entrepreneurs and franchise owners need to be prepared for the unexpected. Contingency planning is a critical component of business growth, enabling organizations to minimize disruptions and recover quickly from unforeseen events.

In this article, we will discuss the importance of contingency planning, the key elements of a comprehensive plan and how to implement a contingency plan effectively. By taking proactive steps to prepare for potential challenges, businesses can build resilience and ensure continued growth and success.

Related: 4 Ways to Prepare Now so Your Business Survives the Unexpected Later

Why contingency planning matters

Disruptions can come in many forms, from natural disasters to cybersecurity breaches, equipment failures or even changes in the competitive landscape. Without proper planning, these events can have a devastating impact on a business's operations, finances and reputation. Contingency planning helps businesses minimize the impact of disruptions, maintain operational continuity and recover more quickly from setbacks. This resilience is crucial for business growth, as it enables organizations to adapt to changing conditions and capitalize on new opportunities.

Elements of a comprehensive contingency plan

Developing an effective contingency plan involves several key steps:

Step 1: Identify potential risks and vulnerabilities

The first step in creating a contingency plan is to identify potential risks and vulnerabilities that could impact your business. This includes both internal and external factors, such as natural disasters , equipment or network failures, supply chain disruptions, cybersecurity breaches, changes in the landscape or the loss of key personnel. By identifying potential threats, businesses can better understand their exposure and develop targeted strategies to address these risks.

Step 2: Develop response strategies

Once potential risks have been identified, businesses should develop response strategies to mitigate the impact of these events. This may involve developing alternative suppliers, establishing backup systems or processes or implementing new security measures. Response strategies should be tailored to the specific risks faced by the business and should take into account factors such as the likelihood of the event occurring, the potential impact on operations and the resources required to implement the strategy.

Step 3: Establish a communication plan

In the event of a disruption, clear communication is essential to ensure that all stakeholders, including employees, customers and suppliers, are aware of the situation and know what steps are being taken to address the issue. A comprehensive communication plan should outline how the information will be shared, who will be responsible for providing updates and what channels will be used to communicate with different stakeholders.

Step 4: Train employees and build awareness

For a contingency plan to be effective, employees need to be aware of the potential risks facing the business and understand their roles and responsibilities in the event of a disruption. This may involve training employees in new processes or procedures, providing guidance on emergency response protocols or conducting regular drills to ensure that all team members are prepared to act quickly and effectively in the event of a crisis.

Step 5: Review and update the plan regularly

As the business environment continues to evolve, it is essential that contingency plans are regularly reviewed and updated to reflect changes in the company's operations, industry dynamics or the broader economic landscape. This may involve conducting periodic risk assessments, updating response strategies or refining communication protocols to ensure that the plan remains relevant and effective.

Related: 5 Reasons Why You Should Create an Emergency Response Program for Your Business

Implementing a contingency plan

With a comprehensive contingency plan in place, businesses can take steps to minimize the impact of disruptions and maintain operational continuity . Key steps in the implementation process include:

Developing an action plan

An action plan should outline the specific steps that will be taken to address each identified risk, including timelines, resources and responsibilities. This plan should be clear, concise and easily accessible to all team members, ensuring that everyone understands their role in the event of a disruption .

Allocating resources

Contingency planning may require the allocation of resources, such as budget, personnel or equipment, to implement response strategies effectively. Businesses should prioritize resources based on the likelihood and potential impact of each identified risk, ensuring that the most critical vulnerabilities are addressed first.

Testing and refining the plan

Once the plan has been developed, it is essential to test its effectiveness through simulation exercises, drills or other means. This will help identify any weaknesses or gaps in the plan and enable the business to refine its strategies accordingly. Regular testing also helps ensure that employees are familiar with the plan and prepared to act in the event of a disruption.

Monitoring the environment and adapting

Contingency planning is an ongoing process that requires businesses to monitor changes in their operating environment and adapt their strategies accordingly. This may involve updating the plan to address new risks, adjusting response strategies in light of changing circumstances, or reallocating resources as needed. By staying attuned to the evolving business landscape, organizations can remain agile and resilient in the face of uncertainty .

Contingency planning is a critical component of business growth, enabling organizations to navigate the unexpected and maintain operational continuity in the face of disruptions. By identifying potential risks, developing targeted response strategies and implementing a comprehensive plan, businesses can build resilience and drive continued success. As the business environment continues to evolve, contingency planning will remain a vital tool for business owners, entrepreneurs and franchise owners seeking to capitalize on new opportunities and protect their organizations from unforeseen challenges .

Related: How to Create a Disaster Plan for Your Business

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The Easy Guide to Creating a Business Contingency Plan

Updated on: 2 November 2022

How to avoid disasters? Be prepared for them. 

When things are going well, you often forget to plan for the bad times. But when disaster strikes, you could lose everything in a heartbeat.

An earthquake can bring your whole shop to the ground, your biggest client can choose your competitor over you, your system suddenly can crash making you lose important data etc. There are endless possibilities of disasters if you really think about it. 

That’s why lack of a plan can be a disaster of its own. 

Let’s see why you need a business contingency plan and how to create one in a few simple steps.  

What is a Business Contingency Plan? 

But first, let’s define what a contingency plan is. 

A contingency plan is a proactive strategy that describes the course of actions or steps the management and staff of an organization need to take in response to an event that could happen in the future. It plays a significant role in business continuity , risk management and disaster recovery. 

It helps you stay prepared for unforeseen events and minimize their impact. It also outlines a plan for carrying out the normal business operations after the event has occurred.  

It’s also known in names such as plan B, backup plan, and disaster recovery plan. In case your primary plan doesn’t work, it’s time to execute the plan B.

Benefits of a Contingency Plan 

Without a contingency plan you’re opening yourself to unnecessary risks. Here are some important benefits of a contingency plan that you cannot look away from. 

• Helps react quickly to negative events. As a contingency plan lists the actions that need to be taken, everyone can focus on what to do without wasting time panicking.
• Having a contingency plan in place allows you to minimize damage that could happen from a disaster and minimize the loss of production. For example if you have emergency generators set up, even during a blackout, your team can work seamlessly. 

How to Make a Contingency Plan 

An effective contingency plan is based on good research and brainstorming. Here are the steps you need to follow in a contingency planning process. 

Step 1: List down the key risks

Identify the major events that could have a negative impact on the course of your business and on the key resources, such as employees, machines, IT systems etc. 

Involve other team heads, subject experts, and even outsiders like business consultants to get a deeper understanding of things that may cause problems and jeopardize the direction.

Use a mind map to organize and categorize the information you gather from the brainstorming session with the staff. You can easily share this with everyone in the organization to get their input as well.

Step 2: Prioritize the Risks Based on Their Impact 

Once you have created a list of all the possible risks that could occur in different areas of your business, start prioritizing them based on the threat they pose. 

The risk impact probability chart is a handy tool you can use here. It helps you evaluate and prioritize risks based on the severity of their impact and the probability of them occurring.

Step 3: Create Contingency Plans for Each Event

In this step you’ll create separate plans that outline the actions you need to take in case the risks you identified earlier occur. 

Consider what needs to be done in order to resume normal operations after the impact of  the event. 

Here you’ll need to clarify employee responsibilities, timelines that highlight when things should be done and completed after the event, restoring and communications processes and the steps you need to have taken in advance to prevent losses when the event has taken place (i.e. insurance coverage). 

You can use a visual format here to highlight the course of actions. It would be easier for everyone to comprehend.

Step 4: Share and Maintain the Plan 

Once you have completed the contingency plans , make sure that they are quickly accessible to all employees and stakeholders. 

Review your contingency plans from time to time and update them as needed. And it’s a best practice to inform your employees of the changes as well, as it may include updates to their roles and responsibilities.  

What’s Your Take on Contingency Plans?

That is how you make a detailed contingency plan. List down the major incidents that could harm your business operations, prioritize them based on their impact and probability, create an action plan explaining what you should do in case they occur, and review and update them frequently. 

What is the contingency planning process at your organization? Let us know in the comments section below.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

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What is a contingency plan? A guide to contingency planning

A business contingency plan is a backup strategy for your team or organization. It lays out how you’ll respond if unforeseen events knock your plans off track—like how you’ll pivot if you lose a key client, or what you’ll do if your software service goes down for more than three hours. Get step-by-step instructions to create an effective contingency plan, so if the unexpected happens, your team can spring into action and get things back on track.

No one wants Plan A to fail—but having a strong plan B in place is the best way to be prepared for any situation. With a solid backup plan, you can effectively respond to unforeseen events effectively and get back on track as quickly as possible. 

A contingency plan is a proactive strategy to help you address negative developments and ensure business continuity. In this article, learn how to create a contingency plan for unexpected events and build recovery strategies to ensure your business remains healthy.

What is contingency planning?

What is a contingency plan .

A contingency plan is a strategy for how your organization will respond to important or business-critical events that knock your original plans off track. Executed correctly, a business contingency plan can mitigate risk and help you get back to business as usual—as quickly as possible. 

You might be familiar with contingency plans to respond to natural disasters—businesses and governments typically create contingency plans for disaster recovery after floods, earthquakes, or tornadoes. 

But contingency plans are just as important for business risks. For example, you might create a contingency plan outlining what you will do if your primary competitors merge or how you’ll pivot if you lose a key client. You could even create a contingency plan for smaller occurrences that would have a big impact—like your software service going down for more than three hours.

Contingency planning vs risk management

Project risk management is the process of identifying, monitoring, and addressing project-level risks. Apply project risk management at the beginning of the project planning process to prepare for any risks that might come up. To do so, create a risk register to identify and monitor potential project risks. If a risk does happen, you can use your risk register to proactively target that risk and resolve it as quickly as possible. 

A contingency plan is similar to a project risk management plan or a crisis management plan because it also helps you identify and resolve risks. However, a business contingency plan should cover risks that span multiple projects or even risks that could affect multiple departments. To create a contingency plan, identify and prepare for large, business-level risks.

Contingency planning vs crisis management

Contingency planning is a proactive approach that prepares organizations for potential emergencies by implementing pre-planned risk mitigation strategies. It involves identifying threats and crafting strategies in advance. 

Crisis management , on the other hand, is reactive, focusing on immediate response and damage control when a crisis occurs. While contingency planning sets the stage for effective handling of emergencies, crisis management involves real-time decision-making and project management during an actual crisis. Both are important for organizations and businesses to maintain their stability and resilience.

Contingency plan examples

There are a variety of reasons you’d want to set up a contingency plan. Rather than building one contingency plan, you should build one plan for each type of large-scale risk or disaster that might strike. 

Business contingency plan

A business contingency plan is a specialized strategy that organizations develop to respond to particular, unforeseen events that threaten to disrupt regular operations. It's kind of like a business continuity plan, but there's one key difference. 

While business continuity plans aim to ensure the uninterrupted operation of the entire business during a crisis, a business contingency plan zeroes in on procedures and solutions for specific critical incidents, such as data breaches, supply chain interruptions, or key staff unavailability. 

A business contingency plan could include:

Strategies to ensure minimal operational disruption during crises, such as unexpected market shifts, regulatory compliance changes, or severe staff shortages.

Partnerships with external agencies that can provide support in scenarios like environmental hazards or public health emergencies.

A comprehensive communication strategy with internal and external stakeholders to provide clear, timely information flow during crises like brand reputation threats or legal challenges.

Environmental contingency plan

While severe earthquakes aren’t particularly common, being unprepared when “the big one” strikes could prove to be catastrophic. This is why governments and businesses in regions prone to earthquakes create preparedness initiatives and contingency plans.

A government contingency plan for an earthquake could include things like: 

The names and information of the people designated to handle certain tasks in advance to ensure the emergency response is quick and concise

Ways to educate the public on how to respond when an earthquake hits

A timeline for emergency responders.

Technology contingency plan

If your business is particularly data-heavy, for example, ensuring the safety and cybersecurity of your information systems is critical. Whether a power surge damages your servers or a hacker attempts to infiltrate your network, you’ll want to have an emergency response in place.

A business’s contingency plan for a data breach could involve: 

Steps to take and key team members to notify in order to get data adequately secured once more

The names and information of stakeholders to contact to discuss the impact of the data breach and the plan to protect their investment

A timeline to document what is being done to address the breach and what will need to be done to prevent data breaches in the future

Supply chain contingency plan

Businesses that are integral parts of the supply chain, such as manufacturing entities, retail companies, and logistics providers, need an effective supply chain contingency plan to continue functioning smoothly under unforeseen circumstances.

These plans hedge against supply chain disruptions caused by events like natural disasters or technological outages and help organizations reduce downtime and ensure real-time operational capabilities. 

A supply chain contingency plan could include:

Secure critical data and systems while promptly notifying key team members, such as IT staff and management, for immediate action.

A predetermined list of essential stakeholders, including suppliers, customers, investors, and authorities, should be contacted to inform them about the disruption and steps being taken.

A detailed timeline is essential for documenting the immediate response and outlining long-term strategies to prevent future disruptions in the supply chain.

Pandemic contingency plan

In the face of a global health crisis, a pandemic contingency plan is vital for organizations in healthcare, retail, and manufacturing. This plan focuses on mitigation strategies to minimize operational disruptions and ensure the safety of employees while maintaining business continuity. 

A pandemic response plan could include:

A comprehensive health and safety protocol for employees, which integrates regular health screenings, detailed risk analysis, and emergency medical support as key components.

Flexible work arrangements and protocols for remote operations and digital communication.

A list of key personnel and communication channels for immediate response and coordination.

Regularly reviewing and adapting the pandemic contingency plan as part of an ongoing disaster recovery plan to address evolving challenges and lessons learned.

How to create a contingency plan

You can create a contingency plan at various levels of your organization. For example, if you're a team lead, you could create a contingency plan for your team or department. Alternatively, company executives should create business contingency plans for situations that could impact the entire organization. 

As you create your contingency plan, make sure you evaluate the likelihood and severity of each risk. Then, once you’ve created your plan—or plans—get it approved by your manager or department head. That way, if a negative event does occur, your team can leap to action and quickly resolve the risk without having to wait for approvals.

1. Make a list of risks

Before you can resolve risks, you first need to identify them. Start by making a list of any and all risks that might impact your company. Remember: there are different levels of contingency planning—you could be planning at the business, department, or program level. Make sure your contingency plans are aligned with the scope and magnitude of the risks you’re responsible for addressing. 

A contingency plan is a large-scale effort, so hold a brainstorming session with relevant stakeholders to identify and discuss potential risks. If you aren’t sure who should be included in your brainstorming session, create a stakeholder analysis map to identify who should be involved.

2. Weigh risks based on severity and likelihood

You don’t need to create a contingency plan for every risk you lay out. Once you outline risks and potential threats, work with your stakeholders to identify the potential impact of each risk. 

Evaluate each risk based on two metrics: the severity of the impact if the risk were to happen and the likelihood of the risk occurring. During the risk assessment phase, assign each risk a severity and likelihood—we recommend using high, medium, and low. 

3. Identify important risks

Once you’ve assigned severity and likelihood to each risk, it’s up to you and your stakeholders to decide which risks are most important to address. For example, you should definitely create a contingency plan for a risk that’s high likelihood and high severity, whereas you probably don’t need to create a contingency plan for a risk that’s low likelihood and low severity. 

You and your stakeholders should decide where to draw the line.

4. Conduct a business impact analysis

A business impact analysis (BIA) is a deep dive into your operations to identify exactly which systems keep your operations ticking. A BIA will help you predict what impact a specific risk could have on your business and, in turn, the response you and your team should take if that risk were to occur. 

Understanding the severity and likelihood of each risk will help you determine exactly how you will need to proceed to minimize the impact of the threat to your business. 

For example, what are you going to do about risks that have low severity but high likelihood? What about risks that are high in severity, but relatively low in likelihood? 

Determining exactly what makes your business tick will help you create a contingency plan for every risk, no matter the likelihood or severity.  

5. Create contingency plans for the biggest risks

Create a contingency plan for each risk you’ve identified as important. As part of that contingency plan, describe the risk and brainstorm what your team will do if the risk comes to pass. Each plan should include all of the steps you need to take to return to business as usual.

Your contingency plan should include information about:

The triggers that will set this plan into motion

The immediate response

Who should be involved and informed?

Key responsibilities, including a RACI chart if necessary

The timeline of your response (i.e. immediate things to do vs. longer-term things to do)

For example, let’s say you’ve identified a potential staff shortage as a likely and severe risk. This would significantly impact normal operations, so you want to create a contingency plan to prepare for it. Each person on your team has a very particular skill set, and it would be difficult to manage team responsibilities if more than one person left at the same time. Your contingency plan might include who can cover certain projects or processes while you hire a backfill, or how to improve team documentation to prevent siloed skillsets. 

6. Get approval for contingency plans

Make sure relevant company leaders know about the plan and agree with your course of action. This is especially relevant if you’re creating team- or department-level plans. By creating a contingency plan, you’re empowering your team to respond quickly to a risk, but you want to make sure that course of action is the right one. Plus, pre-approval will allow you to set the plan in motion with confidence—knowing you’re on the right track—and without having to ask for approvals beforehand.

7. Share your contingency plans

Once you’ve created your contingency plans, share them with the right people. Make sure everyone knows what you’ll do, so if and when the time comes, you can act as quickly and seamlessly as possible. Keep your contingency plans in a central source of truth so everyone can easily access them if necessary.

Creating a project in a work management platform is a great way of distributing the plan and ensuring everyone has a step-by-step guide for how to enact it.

8. Monitor contingency plans

Review your contingency plan frequently to make sure it’s still accurate. Take into account new risks or new opportunities, like new hires or a changing business landscape. If a new executive leader joins the team, make sure to surface the contingency plan for their review as well. 

9. Create new contingency plans (if necessary)

It’s great if you’ve created contingency plans for all the risks you found, but make sure you’re constantly monitoring for new risks. If you discover a new risk, and it has a high enough severity or likelihood, create a new contingency plan for that risk. Likewise, you may look back on your plans and realize that some of the scenarios you once worried about aren’t likely to happen or, if they do, they won’t impact your team as much.

Common contingency planning pitfalls—and how to avoid them

A contingency plan is a powerful tool to help you get back to normal business functions quickly. To ensure your contingency planning process is as smooth as possible, watch out for common pitfalls, like: 

Lack of buy-in

It takes a lot of work to create a contingency plan, so before you get started, ensure you have support from executive stakeholders. As you create your plan, continuously check in with your sponsors to ensure you’ve addressed key risks and that your action plan is solid. By doing so, you can ensure your stakeholders see your contingency plan as something they can get behind.

Bias against “Plan B” thinking

Some company cultures don’t like to think of Plan B—they like to throw everything they have at Plan A and hope it works. But thinking this way can actually expose your team to more risks than if you proactively create a Plan B.

Think of it like checking the weather before going sailing so you don’t accidentally get caught in a storm. Nine times out of ten, a clear sunny day won’t suddenly turn stormy, but it’s always better to be prepared. Creating a contingency plan can help you ensure that, if a negative event does occur, your company will be ready to face it and bounce back as quickly as possible. 

One-and-done contingency plans

It takes a lot of work to put a contingency plan together. Sometimes when you’ve finished, it can be tempting to consider it a job well done and forget about it. But make sure you schedule regular reminders (maybe once or twice a year) to review and update your contingency plan if necessary. If new risks pop up, or if your business operations change, updating your contingency plan can ensure you have the best response to negative events.  

You’ve created a contingency plan—now what?

A contingency plan can be a lot of work to create, but if you ever need to use it, you’ll be glad you made one. In addition to creating a strong contingency plan, make sure you keep your plan up-to-date.

Being proactive can help you mitigate risks before they happen—so make sure to communicate your contingency plan to the team members who will be responsible for carrying them out if a risk does happen. Don’t leave your contingency plan in a document to collect dust—after creating it, you should use it if need be!

Once you’ve created the plan, make sure you store it in a central location that everyone can access, like a work management platform . If it does come time to use one of your contingency plans, storing them in a centrally accessible location can help your team quickly turn plans into action.

Related resources

How Asana streamlines strategic planning with work management

How to create a CRM strategy: 6 steps (with examples)

What is management by objectives (MBO)?

Write better AI prompts: A 4-sentence framework

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Mastering Contingency Planning: Expert Strategies, Proven Best Practices, and Testing Techniques for Optimal Results

By Joe Weller | May 9, 2023

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Successful organizations must understand potential risks and have contingency plans in place to address them. We’ve assembled expert tips on effective contingency planning and offer practical insights on how to test those contingency plans.

Included on this page, you’ll find the benefits of contingency planning , steps to take to create a contingency plan, examples of contingency plans , and information on a range of exercises your team can do to test its contingency plans.

What Is a Contingency Plan?

A contingency plan is a proactive strategy that outlines the actions a person or entity will take in response to a potential future event. Businesses often develop contingency plans to prepare for risks and mitigate their impact on the business.

What Is Business Contingency Planning?

Business contingency planning is work an organization does to determine how it responds to future events that might affect the business. The goal is to prepare an organization to respond to negative events and mitigate their impact on the business.

A business contingency plan is a written document that outlines an organization’s contingency planning efforts. It typically includes a comprehensive assessment of possible risks to the business and corresponding measures the organization has planned to mitigate these risks, such as legal and budget contingency.

Why Is a Business Contingency Plan Important?

A business contingency plan is crucial for any organization, as it helps them respond quickly and effectively to negative events. With a solid contingency plan in place, companies can minimize damages and continue to thrive even amid challenges.

While an organization might develop a contingency plan for risks to individual projects or general risks to the enterprise as a whole, business contingency plans refer specifically to general risks to the enterprise. This document details all of the most important risks that a business or organization faces.

In recent years, the importance of business contingency plans has increased significantly. With the rise of climate change, natural disasters have become more frequent and disruptive, underscoring the need for organizations to have effective contingency plans. In addition, the ever-growing threat of cybercrime has further highlighted the importance of contingency planning, as businesses increasingly rely on technology to operate.

“Before, you might have said, ‘What are the odds of a 100-year flood?’” says Luis Contreras, President and Principal Consultant for AzTech International , a California consultancy that helps organizations manage large, complex projects. “Well, they are happening more often now. ‘What are the odds of a cyber incident?’ Well, they're happening more often.”

Many organizations take steps in their risk management programs to try to completely eliminate certain risks. However, it’s almost impossible for any organization to completely eliminate the chance of a risk happening, says Erika Andresen,  a business continuity and resilience expert, author, and founder of EaaS Consulting . Business contingency planning is important, she says, “because your risk management will fail at a certain point.”

The Benefits of a Contingency Plan

Contingency plans offer several benefits to organizations. They enable organizations to respond promptly and effectively to unexpected events, minimize damages, and facilitate a quick recovery. With a contingency plan in place, organizations can take proactive measures to mitigate risks.

Here are some of the primary benefits of having a contingency plan in place:

• Improves Event Responsiveness: By having a clear plan in place, there is no confusion and individuals know how to react without blindly searching for direction. This enables the organization to take swift and effective action, minimizing response times and ensuring continuity of operations.

• Facilitates Quick Recovery: Organizations with good contingency plans bounce back quickly from negative events. For example, a severe storm or power outage might have a huge effect on a state or metropolitan area, but businesses that have backup generators and other contingency plans can often resume operations quickly. “It's resilience — it's how your company stays a company,” Andresen says. “That's how the company is able to grow and thrive. You've figured out that you're going to have a risk that is going to impact your operations. And then you worked and took the extra step to put in policies and procedures to get yourself back up and running with minimal disruption.”
• Decentralizes and Disseminates Important Information: Business contingency planning forces organization leaders to gather people to assess the organization’s potential response to various events. This work necessitates the sharing of important information about the company and its operations, resulting in more people knowing how to assist in the company’s response. Accessible, decentralized information is invaluable in a crisis event or when top leaders in a company suddenly leave.“If you have a company with one or two top leaders, then it makes it even more important,” says Lokenauth. “If one person has all the knowledge, when something happens to that one person, how does the company function?”
• Gives the Company Confidence in Its Operations: When you create effective contingency plans, you boost the confidence of everyone in the company. You instill a sense of trust that the company will respond well in an emergency. Moreover, you enhance confidence in the company’s overall preparedness, foresight, and integrity.

What Does a Contingency Plan Cover?

A contingency plan covers the important risks the organization is monitoring and any possible triggers to those risks. It also outlines the specific actions organization staff will take to respond to them.

A contingency plan often includes the following components:

• Triggering Events: Identify the events that can make a risk event more likely to happen, such as weather patterns or market conditions.
• Response Details: Outline specific actions the organization will take in response to a risk event, including preventive measures and mitigation strategies.
• Organizational Responsibilities: Detail the roles and responsibilities of key personnel within the organization, such as the crisis management team and first responders. This might include a RACI chart that outlines who is responsible, accountable, consulted, or informed about specific response actions.
• Key Contacts: Include contact information for key people or organizations that will be involved in the response efforts, such as emergency services, suppliers, and customers.
• Outside Experts: Identify outside experts or consultants the organization might need to engage for help when responding to the risk event, such as legal advisors, public relations firms, or technical specialists.
• Response Timeline: Include a timeline that details when certain responses need to happen, such as when to activate the crisis management team, notify stakeholders, or implement recovery measures.

Learn more about important components and how to write an effective contingency plan in this all-inclusive guide to writing contingency plans.

How to Develop a Contingency Plan

Developing a contingency plan begins with identifying and assessing potential risks. Next, teams outline an appropriate response to each risk, including specific actions that need to be taken and who will be responsible for executing those actions.

Steps in Business Contingency Planning

To develop an effective contingency plan, businesses need to follow some critical steps. The process starts with identifying and assessing potential risks and creating a response plan. Teams should then be trained on the plan and continually monitor potential risks.

These are the important steps to creating an effective contingency plan:

• Identify and Assess Risks: Identify potential risks that could have the most significant impact on your organization. This assessment might involve conducting a business risk analysis to evaluate potential threats, vulnerabilities, and consequences. Learn more about this step in the contingency planning process in this comprehensive guide to risk mitigation .
• Identify Resources: Identify what resources your organization already has that can help with contingency responses. This might include people, tools, or services that can be used to respond quickly to an unexpected event. Gather and coordinate those resources.
• Create Contingency Plans: Create a contingency plan for each risk that your organization has identified as critical. This plan should outline specific actions that need to be taken, who will be responsible for those actions, and a timeline for executing the plan.
• Seek Input and Secure Approvals: Get input from stakeholders and people within your organization on your draft contingency plans. Once you’ve gathered feedback, finalize plans and get approval from the organization’s leaders.
• Share Your Plans: Communicate your contingency plans to all relevant stakeholders within your organization. This includes making sure that everyone understands what the plans are, what their role is in executing the plans, and any necessary training or resources required to implement them.
• Perform Training Exercises: Train all relevant staff members on the contingency plans, and make sure they understand their roles in executing them. To test the effectiveness of the plans, perform exercises or drills that simulate potential risk events.
• Monitor Risks and Contingency Plans: ​​Regularly review and assess business risks to ensure that your contingency plans remain effective and relevant. Evaluate whether the current plan provides the best response to potential risks and consider making updates or modifications as necessary.
• Create New or Adjusted Contingency Plans as Needed: If your monitoring indicates that your contingency plans require adjustments, take action and promptly update them.

Business Contingency Planning Grid Template

Download a Sample Business Contingency Planning Grid Template for  Excel | Microsoft Word

Download a Business Contingency Planning Grid Template for  Excel | Microsoft Word

Download this business contingency planning grid template to assist your team in identifying potential risks to consider in your organization’s business contingency planning. This template provides a comprehensive list of broad risk categories and specific risks within those categories. By using this tool, you can evaluate which risks are relevant to your organization and develop appropriate contingency plans.

Contingency Planning for IT

Contingency planning in IT follows the same basic steps as other organizations. However, it often begins with a contingency planning policy statement , which outlines an organization’s broad approach to contingency planning.

What to Include in a Contingency Planning Policy Statement

A contingency planning policy statement is a document that outlines how an organization will perform contingency planning. It includes details on objectives, roles and responsibilities, resource and training requirements, testing schedules, and data backup and storage plans.

A contingency planning policy statement should include the following components:

• Objectives: Describe the organization's overall contingency planning objectives — for example, what types of risks the organization is preparing to address and how the organization's contingency planning efforts align with its overall business goals.
• Roles and Responsibilities: Outline the specific roles and responsibilities for performing contingency planning within the organization. This should include both high-level positions and specific individuals who will be responsible for carrying out different components of the plan.
• Organizational Functions and Departments: Identify which organizational functions and departments will be responsible for performing contingency planning. This helps ensure that all relevant areas of the organization are involved in the planning process.
• Resource Requirements: Determine the resources needed to support contingency planning efforts, including funding, personnel, equipment, and other necessary resources.
• Employee Training Requirements: Develop a plan for training employees on their roles and responsibilities in the event of a contingency situation. This might include both general training on contingency planning concepts and specific training on the organization's specific plan.
• Schedules of Exercises and Tests: Establish a schedule for conducting exercises and tests of contingency plans to ensure that they are effective.
• Procedures for Maintaining and Updating: Develop procedures for maintaining and updating contingency plans over time, including regular reviews and updates to reflect changes in the organization's risk landscape or other relevant factors.
• Data Backup and Storage: Determine how the organization will back up and store all electronic data to ensure that critical information is not lost in the event of a contingency situation.

A Contingency Plan Model for IT

The National Institute of Standards and Technology (NIST) has created SP 800-34, a popular contingency plan guide for IT. The guide outlines the steps and considerations that organizations should take when developing, implementing, and maintaining an effective contingency plan.

The SP 800-34 guide covers the entire contingency planning process, from risk assessment to plan testing and maintenance. It is widely used as a reference by government agencies, private organizations, and security professionals.

IT Preventive Controls

Any organization’s IT contingency plan should include preventive controls. These are measures an organization can take to prevent interruptions to information services or technology.

 Here are some basic IT preventive controls recommended by the NIST for federal information systems:

• Uninterruptible power supplies (UPS): To provide short-term backup power to all components, appropriate for the size of your system.
• Fuel-powered generators: To provide power over the longer term.
• Air-conditioning systems: Establish adequate capacity to prevent failure of components that malfunction when overheated.
• Fire and smoke detectors: Install in appropriate locations.
• Fire suppression systems: Install to minimize potential damages.
• Water sensors: Place in the ceiling and floor of rooms where computer equipment is located.
• Containers for backup media and vital non-digital records: Ensure they are heat resistant and waterproof.
• Master system shutdown switch: Make available for emergencies.
• Off-site storage areas: Use them for backup media, system documentation, and important non-digital records.
• Technical security controls: This includes management of cryptographic keys.
• Frequent scheduled backups of data: This includes information on where the backups are stored, onsite and offsite.

Examples of Contingency Plans

Contingency plan examples can help your team understand what to consider in creating a plan and the important components to include.

You can learn more about contingency planning and download blank and example contingency plans.

Business Contingency Planning Best Practices

To improve your organization’s business contingency planning, experts recommend following a number of best practices, such as performing an effective risk assessment, training employees on the plan, and conducting exercises to test the plan.

These are some best practices to follow for effective business contingency planning:

• Perform Good Risk Assessment and Analysis: Your team should identify the most critical risks through a thorough risk assessment. This includes analyzing the potential impact of each risk and determining which risks require a comprehensive contingency response.
• Ensure All Team Members Are Aware of Contingency Plans: Contingency plans will not be effective if the employees in your organization are not aware or have only a vague understanding of them. Incorporate contingency planning into employee training and orientation programs, and communicate regular reminders and updates on the plans through team meetings, newsletters, and other internal communication channels.
• Train Staff and Conduct Regular Drills: Your organization should train all employees responsible for specific tasks in the plan. Conducting exercises or drills where employees simulate a risk event scenario can help teams identify potential gaps or issues in the plan and improve its effectiveness. Many organizations will complete a business continuity or contingency plan, then “put it on a shelf and say, ‘OK, I did it.’ No, you didn’t,” says Andresen. “You haven't done it. You don’t know what’s in it. You don’t have the muscle memory for what the procedures are. When the disaster happens, you don’t want to be saying, ‘Hold on, let me flip through the pages.’ That's another integral part to business continuity planning or contingency planning: to train the plan and exercise the plan. That’s how you figure out if the plan works.”
• Continually Review Plans and Make Necessary Adjustments: Drills and exercises are crucial to contingency planning, as they allow organizations to identify which contingency are ineffective and need to be revised. It is essential to modify plans when necessary, whether due to changing risks or other factors. After conducting a drill on a contingency plan, Andresen advises, “Go back and relook at the plan and say, ‘OK, we did this well. This didn't work. This needs to be improved.’” By doing so, teams can ensure that their contingency plans actually work. “This is why this needs to be revisited continuously so that the plan is not just a heavy paperweight,” says Andresen. “Don't break your arm patting yourself on the back that you've accomplished making the plan — actually do something with it.”

Types of Exercises to Test Your Contingency Plan

Conducting a variety of drills and exercises for contingency plans is essential for organizations that want to be prepared for any potential risks. The following chart outlines different types of exercises that can test and improve your contingency plans.

Common Contingency Planning Pitfalls to Avoid

To achieve effective contingency planning, it is important to be aware of common challenges and pitfalls. One such challenge: organizations not allocating sufficient resources to planning and executing responses that are part of the plans.

These are some of the most common challenges and pitfalls to avoid:

• Lack of Resources Devoted to Contingency Planning and Actions: To create effective contingency plans, organizations must allocate staff time and resources for both planning and response. This includes significant resources to execute the actions required in response to a risk event. Neglecting these necessary resources can result in ineffective contingency plans and costly responses to risks.
• Lack of Buy-in From Organizational Leaders: Lack of buy-in from organizational leaders often results in a lack of resources. Leaders who don’t value contingency planning might not provide the necessary funding, time, or attention to ensure the plans are effective. This can result in plans that are incomplete, inadequate, or not tested or updated regularly. “Every level of employee is going to look at leadership and see if they take this seriously,” Andresen says. “Is this some simple extra duty? If leadership is saying, ‘No, this is really important, and this is why this is important,’ they get the employees behind that. Then the employees are going to take it seriously.”
• Bias Against Plan B Thinking: Contingency planning assumes that at some point, an organization’s mission is going to fail. Unfortunately, some organizational leaders have a bias against this, as they perceive it as thinking about a Plan B. However, these leaders must work to understand that having contingency plans is vital for the organization’s future and doesn’t reflect a lack of confidence in Plan A.
• One-and-Done Contingency Plans: According to Andresen, organizations often develop contingency plans because they are deemed useful or someone within the organization encourages their development. However, these contingency plans are often completed, then disregarded. In order for contingency plans to be effective, organizations must share them widely, train their employees on them, and continuously adapt them to changing circumstances.

Effective vs. Ineffective Contingency Planning Example

The table below demonstrates the varying outcomes between a well-considered contingency plan and one that is less so. The consequences of these differing results can be significant for both the organization and the community.

Resource and Environment at Risk: An oil production facility has above-ground oil flowlines that run for 7,000 feet. The facility is located half a mile west of a major creek and six miles north of a river. The creek flows into the river, which flows into a town of 150,000 people located 12 miles away.

Contingency Plan Purpose: Detect and mitigate any significant oil leak from the facility's flowlines, with the goal of minimizing environmental damage. The plan places a special emphasis on preventing oil from reaching the nearby creek or river.

Business Contingency Plan vs. Business Continuity Plan

A business continuity plan and a business contingency plan share some similarities, but a business continuity plan primarily focuses on how an organization can continue operations during an emergency, whereas a contingency plan addresses a broader range of risks.

• Business Continuity Plan: A business continuity plan outlines the steps an organization will take to maintain normal operations following a major and disruptive event, such as an earthquake, fire, or major data breach.
• Business Contingency Plan: A business contingency plan covers a broader range of risks that an organization might face and outlines how the organization plans to respond. These risks can include potential major disruptions or events that might not directly affect operations but still require an effective response.

Business Contingency Plan vs. Project Risk Management Plan

Business contingency plans and project risk management plans both identify potential risks and determine ways to respond to them. The former focuses on risks to the entire organization, while the latter focuses on risks to a particular project.

In a project risk management plan , teams identify and assess possible risks to a specific project. It then determines how project leaders can respond to, eliminate, or mitigate those risks.

A business contingency plan identifies potential threats to an organization's ability to continue operating. It assesses risks that could temporarily or permanently halt operations, and then outlines plans to mitigate or eliminate those risks.

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An overview of business contingency plans

Reading time: about 3 min

Natural disasters, data hacking, theft—your organization has likely prepared for major catastrophes.

Less significant events can also be majorly disruptive—say your biggest customer suddenly switching to a competitor or your entire sales staff getting food poisoning at their annual retreat.

Many circumstances have the potential to disrupt, or worse, shut down your business. A business contingency plan can save the day. Follow the steps below to develop a business contingency plan that will help you stay prepared for the worst.

What is a contingency plan?

A contingency plan is a roadmap created by management to help an organization respond to an event that may or may not happen in the future—whether it’s a large-scale event like a natural disaster or a small-scale roadblock like employee theft.

The purpose of a business contingency plan is to maintain business continuity during and after a disruptive event. A contingency plan can also help organizations recover from disasters, manage risk, avoid negative publicity, and handle employee injuries.

By developing a contingency plan, your business can react faster to unexpected events. The faster your organization is able to get back up and running, the less impact you'll see on profits and revenue.

How to write a contingency plan

There are many factors to consider when building a contingency plan. These four steps are a good place to start preparing for the unexpected.

1. Identify the risks

Before you can prepare for a disaster, you need to understand what types of disasters you’re preparing for. Think about all the possible risks to your organization, including natural disasters, sudden changes to revenue or personnel, or security threats.

2. Prioritize the risks

Make sure you spend your time and resources preparing for events that have a high chance of occurring as you write and develop your contingency plan. For example, you may have listed earthquakes as a possible risk. However, if your area doesn't experience many earthquakes, you wouldn’t want to spend all your time preparing for this event. If your area is prone to flooding, you should spend more of your resources preparing for floods.

To determine which risks are more likely to occur, use a risk impact scale . This will help you to estimate the likelihood that an event will occur and determine where to focus your efforts.

3. Develop contingency plans

Once you’ve created a prioritized list, it’s time to put together a plan to mitigate those risks. As you write a contingency plan, it should include visuals or a step-by-step guide that outlines what to do once the event has happened and how to keep your business running. Include a list of everyone, both inside and outside of the organization, who needs to be contacted should the event occur, along with up-to-date contact information.

You can also create a list of ways to minimize the risk of these events now and start acting on it. 

4. Maintain the plan

Maintenance of your contingency plan is arguably the most important part of the process because it’s where the work happens to ensure you’re always ready.

Review your plan frequently. Personnel, operational, and technological changes can make the plan inefficient, which means you may need to make some changes.  

You’ll want to communicate the plan to everyone who could potentially be affected and clearly define what everyone's roles and responsibilities will be during a time of crisis. 

Buniness contingency plan example

To help you prepare for the unexpected, get started with these business contingency plan examples below. 

Ready to get started? Business contingency plans help you prepare your organization to handle anything unexpected. Give your employees a realistic plan for how they should handle any problem that arises. 

Learn the 5 steps to an effective risk management process.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Contingency Planning: A Growing Company’s Blueprint For Business Disruption Readiness

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By Neil Krefsky, Head of SAP Finance and Risk Product Marketing, SAP

Rapid and violent disruption to supply chains, trade partnerships, technology stacks, and global markets is plunging midsize companies into a period of high unpredictability. While no one ever wishes for a surprising shock to their operations, businesses that plan for them and execute effectively ultimately win.

At any moment, finance leaders are always facing the possibility of a significant business disruption that will test the limits of their contingency plans, as a flood of questions swirl around their brain:

·      Did we miss an emerging opportunity or risk in our scenario analysis?

·      Are our what-if contingency planning processes tainted with hidden bias?

·      Are we using the right internal and external data during our assessments?

During such times of uncertainty, finance leaders must find ways to help ensure the company is positioned to weather any crisis with strength, resilience, and confidence. How? According to Shari Lava, research director of Small and Medium Business at IDC, during the Webinar “ Winning in the 2020s: Six Trends Every Midsize Business Needs to Know ,” close monitoring of events and what-if analysis integrated with forecasting models are trending to become the best practices.

Empowering effective change with the right experiences

Contingency planning for midsize businesses is a double-edged sword. In many ways, growing companies are sized just right to shift operations and address emerging needs faster than their larger competitors. However, they often do not have the resources to cushion the blow of even the smallest misstep and delay along the way.

How can finance leaders help ensure the future viability of their company – even if the worst-possible case happens? By delivering the insights necessary for creating contingency plans that address three pillars of digital business model transformation: sales, finance, and the supply chain.

Fixing each pillar alone does not overcome disruption. Yet when all three elements support and enrich each other, finance leaders can encourage changes that mirror the needs and shifts of the real world. Efforts may include the innovation of a new business model, process, product, service, or customer experience. But most critical of all, finance leaders can help ensure that the company’s response to disruption progresses as quickly as possible.

This approach to contingency planning requires a level of insight and visibility enabled by the analysis of different types of data from various sources. With Intelligent ERP, finance leaders of midsize companies can turn this ideal state into a reality. In fact, IDC predicts that 75% of enterprise applications, implemented by midsize companies, will be powered by such an intelligent core by 2022.*

The use of Intelligent ERP gives finance organizations an exhaustive view across different scenarios – including potential risks, related compliance requirements, and overall costs – that can help them make accurate decisions quickly. Furthermore, when the time comes to execute the contingency plan, the businesses can act instantly and deliver outcomes strategically.

Responding to disruption with fact-based, predictive-driven action

For finance leaders of midsize companies, the traditional role of running the business and executing operational tasks with a day-to-day or week-to-week view is no longer enough. Uncertainty and disruption are always looming on the horizon, and finance organizations must have the right plans in place to mitigate minor bumps, worst-case scenarios, and everything in between – exactly when the moment strikes.

By creating a contingency plan built with fact-based, predictive analytics, finance leaders can encourage the kind of action that protects the company from significant harm. And possibly, after all is said and done, the business transforms into a genuinely better and more-effective operation.

Listen to an excerpt of our Webinar, “ Winning in the 2020s: Six Trends Every Midsize Business Needs to Know ,” with Timo Elliott, global innovation evangelist from SAP and guest speaker Shari Lava, research director of Small and Medium Business at IDC.

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Suicide Squad Reveals Amanda Waller's Secret Supernatural Team

10 funniest peanuts comics that just turned 70 (in may 2024), nightwing and batman are officially equals in epic gotham cosplay.

• Amanda Waller targets Earth's metahumans, stealing their powers in DC's Absolute Power event.
• Waller's contingency plan disables magic users like the Spectre and John Constantine.
• The DC Universe's magical side is diverse and powerful, but vulnerable to Waller's strategies.

Warning: contains spoilers for Absolute Power #1!

The magical corner of the DC Universe is full of god-level heroes, such as the Spectre , but even they are powerless before Amanda Waller’s anti-magic contingency. In Absolute Power , DC’s big 2024 event, Waller has set her sights on Earth’s metahumans, and in issue one, she unveils her endgame: stealing the heroes’ powers. Always one step ahead, Waller has prepared for individuals such as the Spectre or John Constantine.

Absolute Power #1 is written by Mark Waid and drawn by Dan Mora. After nearly a year of preparation, Waller makes the move she has waited her whole life for. As heroes the world over are framed for crimes they did not commit using AI-generated deep fakes, Waller deploys Amazos who begin stealing their powers.

John Constantine tries to summon the Spectre to stop Waller, but she reveals she is ready for them both.

She scrambles John’s brains, causing him to forget how to cast spells and perform magic in general.

The DC Universe's Greatest Strength is Its Diversity in Genres, and Its Supernatural Side Is Its Best

Dc's supernatural side is also home to some of its most powerful characters.

The DC Universe is diverse, featuring characters operating in a number of genres, such as Westerns, science fiction, and the supernatural. The magical/supernatural side of DC is one of its richest and most dangerous. Immensely powerful characters, such as the aforementioned Spectre or the Phantom Stranger, call it home. Other sorcerers and magic users, such as Zatanna, John Constantine and Blue Devil, also populate this corner. They are each powerful in their own way, but are powerless before Amanda Waller’s machinations.

In her years of working with the DEO and other government agencies, Waller has learned heroes like the Spectre can derail even the best laid plans.

By taking out some of DC’s most powerful heroes early in the game, Amanda Waller is putting her decades of experience working with metahumans to use. In her years of working with the DEO and other government agencies, Waller has learned heroes like the Spectre can derail even the best laid plans. The Spectre helped turn the tide of battle in various crossovers , such as Zero Hour . During The Blackest Night, Nekron made sure to take the Spectre out of commission early on, and Waller has seemingly learned this lesson as well. Taking out the Spectre is a smart strategy.

DC's Suicide Squad has a new iteration with Amanda Waller assembling a supernatural version of the team featuring a demon, a ghost, and...a bird?

Without Its Magical Side, the DC Universe May Fall to Amanda Waller

Dc's magic heroes are fighting an uphill battle.

And Amanda Waller’s method of taking out magical beings such as the Spectre is genius. Using magic requires serious thought and concentration, or else matters can quickly go wrong. Magic users must also recite their spells out loud for them to work, such as Zatanna’s backward-speaking spells. Amanda Waller, understanding this, has created technology that robs sorcerers of their cognitive functions, extending to both thought and speech. The ability to take out DC’s magical characters is an impressive one, and shows just how serious Amanda Waller is about her mission.

Absolute Power #1 is on sale now from DC Comics!

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How to Develop a Business Contingency Plan

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Plan A in the business world is essentially the same for every company on any given day: Keep doing what works well to increase revenue and customer satisfaction.

Unexpected business disruptions such as natural disasters, technology failures, and even the COVID-19 pandemic, however, are inevitable. That’s why a business contingency plan -- your Plan B -- is essential to minimize the impact of these events on day-to-day operations.

Overview: What is a contingency plan?

A business contingency plan identifies a variety of catastrophic events that could occur and formulates responses to mitigate their effects.

These situations, as with the examples above, are typically beyond your control, so the best you can do is determine your optimal course of action when time is of the essence to protect your business.

The business contingency plan is much like project risk management but on a larger scale. Instead of anticipating and managing risk at the team or department level, the business contingency plan is applicable across large swaths, if not all, of your company.

What to consider when developing a contingency plan

Input from all levels within your organization, everyone from senior-level executives to front-line workers, is critical when developing a business contingency plan as part of your change management efforts.

In addition, because extreme events are inevitable without being predictable, how quickly you recover from these situations will be one of your key business metrics.

You also need to keep the three considerations below in mind to shape an effective business contingency plan.

1. Financial solvency

When a crisis happens, the number one priority is the continued operation of the company, which ultimately boils down to cash flow and solvency. This requires thinking proactively about your cash reserves, liquid assets, and bottom-line numbers to keep the lights on and doors open.

2. Customer loyalty

After making sure your company can survive the financial impact of a catastrophic event, the next issue is customer loyalty. While everyone knows the unexpected can and will happen, your customers demand that you respond quickly and transparently.

Anything less than that can lead to a damaged reputation and customer defection to your competitors.

3. Negative and positive events

Being ready to deal with negative events like a natural disaster is a common contingency plan example, but you also need to be prepared when unexpected good fortune comes your way.

If a marketing initiative goes viral and leads to a spike in orders, which could strain your supply chain and production capabilities, you must have a plan for that too.

How to write a contingency plan

As part of your business development efforts, contingency planning is also a form of gap analysis. You will not only be identifying potential threats and their relative likelihood, but you’ll also be determining how prepared you are now versus where you need to be to ensure operations continue with the minimum amount of interruption.

Step 1: List potential threats

The first step in compiling the information necessary to flesh out a contingency plan template is to identify all the potential threats your company faces. In general, these can be broken out into three categories: natural disasters, human-caused events, and technology failures.

Tips for listing potential threats:

To determine the maximum number of potential threats, you’ll need to cast a wide net by soliciting input from multiple departments and personnel within your organization as well as other stakeholders. In addition, business consultants, who have a perspective beyond that of the company itself, can offer valuable insights.

• Collect quantitative and qualitative information: Surveys will generate quantitative information such as statistics about perceived potential threats, while one-on-one interviews employing open-ended questions will provide more subjective, qualitative information.
• Use a visual threat chart: Organizing potential threats visually by way of diagrams or mind maps will also aid the subsequent contingency planning steps beyond the use of text or lists alone.

A visual threat chart will help categorize the different types of crises that could impact business operations. Image source: Author

Step 2: Prioritize potential threats

Once you’ve identified all potential threats, everything from a power outage to the eruption of a volcano to a cyberattack, you’ll need to prioritize each threat based on its general likelihood. After all, if you’re located on a coastline, flooding will be more likely than the dust storm that might be a routine occurrence in an arid region.

Tips for prioritizing potential threats:

You’ll want to use a uniform "instrument" -- that is, a consistent method -- to analyze the potential impact of different disasters based on the information you collected in step one. Otherwise, you could end up with an ever-moving target that will make your resource allocation less effective.

• Calculate risk in multiple areas: “Risk” is a broad term, so when it comes to calculating the relative threat from different events, break the impact out into categories including physical resources, human resources, company reputation, and legal/regulatory liabilities.
• Use a threat matrix: Much like a prioritization matrix, a threat matrix will help you visualize which potential events deserve more attention by calculating whether the threat’s impact is high or low and if it is more or less likely to occur.

A threat matrix allows you to plot multiple threats to determine which ones warrant higher priority. Image source: Author

Step 3: Formulate threat responses

Now you are ready to lay out your responses to various threats. Critical elements to determine your standard operating procedure for each scenario include personnel responsibilities, equipment, cost, offsite contacts and service providers, and recovery timeline.

Tips for formulating threat responses:

Your threat responses must be detailed enough to provide clear guidance during a crisis. At the same time, they cannot be so granular that they don’t allow the flexibility necessary to respond quickly as chaotic events unfold.

• Test each response plan: Most contingency plans fail due to inadequate testing. Just as you need fire drills so everyone knows how to get out of a building, each plan needs regularly scheduled dry runs to time how long it takes, identify any weaknesses, and revise as necessary.
• Identify proactive measures: After determining what needs to be done to resume operations after an unexpected event, work backward to see what you can do before it occurs. If you’re worried about losing power, for example, consider adding backup generators or using a more robust data backup protocol to prevent unnecessary losses.

Step 4: Communicate the contingency plan

Once each contingency plan has been tested and approved, it must be easily available to all employees and stakeholders. After all, it won’t do any good gathering dust in a three-ring binder on the top shelf in a locked storeroom.

Tips for communicating the contingency plan:

As with other planning documents, including financial, strategic, and succession, your contingency plans are living documents, not museum pieces, and must be treated as such.

• Perform regular reviews: By scheduling periodic reviews on at least an annual basis, employee knowledge of procedures will be reinforced. In addition, they can provide input for ongoing updates.
• Use online/mobile applications: In addition to having hard copy plans, make this information available online and through mobile applications. That way, people can respond appropriately even if they are offsite or are at a remote business location.

Common pitfalls to avoid when creating a contingency plan

Successful contingency planning deals with the same issues as all other project planning: avoiding silos, updating results, and disseminating information.

1. Lack of input

Contingency planning cannot be left to one department or, even more problematically, to one person due to the scope of processes, money, and personnel involved in recovery efforts.

You should use a cross-functional team to obtain actionable input from a variety of organizational perspectives.

2. Lack of current information

In addition, your contingency management plan is not a static document because it presents your best options and responses at a single point in time.

As your business evolves, personnel change and different resources and capabilities become available, you’ll need to regularly revisit the contingency planning process to reflect these changes.

3. Lack of communication

The best contingency planning in the world won’t do you any good if nobody knows about this key piece of business intelligence or how to access it in the middle of an emergency.

Make sure everyone knows how to find this information, their respective roles to play, and how to reach and remain in contact with other members of your disaster response teams.

Start on your business contingency plan today

Strictly speaking, developing your business contingency strategy is not a front-line, day-to-day operations activity. At the same time, a lack of planning for the worst things that could happen threatens the very existence of your company.

That’s why you need to maximize your efforts and be as efficient as possible by using, for example, the best project management software to work both smart and hard.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. The Ascent has a dedicated team of editors and analysts focused on personal finance, and they follow the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands.

The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

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• Business Plans

What Is a Business Contingency Plan?

Small Business Contingency Plans Explained

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A business contingency plan is a course of action that will be taken if an unexpected event occurs that could disrupt the business. It's a backup plan that ensures the business can continue to operate despite an adverse event.

A business contingency plan is a “plan B” or blueprint for how to keep your business running in the event of a natural disaster, major technical issue, or other unforeseen disruption. A contingency plan identifies potential risks to your business and outlines steps your management team and employees can take if confronted with one of those risks. It helps protect the health and safety of your workers after an event has occurred, while also minimizing business interruptions that can result in financial losses. A well-thought-out plan can mean the difference between staying in business and shutting down.

• Alternate term : Continuity plan

Do You Need a Business Contingency Plan?

Every business should have a contingency plan so it can resume its operations as soon as possible after a disruptive event occurs. 

A plan will save you time and money since you've already decided what resources you need and actions to take to keep your business going. It can also alleviate some of the stress you're likely to feel when disaster strikes. 

Rather than fretting about what you should do, you can simply follow the steps you've laid out ahead of time.

How to Create a Business Contingency Plan

The first step in creating a contingency plan is to determine what risks are most likely to impact your business and the functions they will impact. Think about how your business normally operates and the types of events that could disrupt its major activities. Your risks depend on the nature of your business and your geographical location. For instance, hurricanes and earthquakes are risks in some areas but not others. Here are examples of events that could cause disruptions:

• Physical damage by fire, windstorm, or other peril to a building that your business occupies
• Damage to machinery or breakdown of equipment
• An extended utility outage (electricity, water, gas, or telecommunications)
• Resignation or extended absence of key employees
• Damage to your computer system or a data breach
• Interruption of your supply chain
• Blocked access to your business location

Some of these events could also have legal implications. For example, all 50 states, along with D.C. and U.S. territories, have laws requiring businesses to notify individuals whose personally identifiable information has been stolen or released in a data breach.

Run an Impact Analysis

The next step is to conduct a business impact analysis so you can predict the potential outcomes of a disruption of one of your business functions or processes. An analysis can help you estimate the operational and financial impacts of a disruption. It can also help you gather the information you will need to develop recovery strategies. Here are examples of the potential operational and financial impact from the disruption of business functions and processes:

• Lost or delayed sales or income
• Increased expenses, such as overtime, outsourcing, and expediting costs
• Regulatory fines
• Contractual penalties or loss of contractual bonuses
• Customer dissatisfaction or defection
• Delay of new business plans  

When estimating the impact of events, be sure to consider timing and duration. 

A hurricane, structure fire, or data breach may have a greater effect on your income or costs if it occurs during your busy season than when business is normally slow. Likewise, a disruption that lasts for a day will have less impact than one that extends for a week or a month.

You can use the results of your impact analysis to rank your risks in order of priority. Risks with the greatest potential impact should be listed first.

One of the easiest ways to write a contingency plan is to use a template, which is provided by several state and local websites including, for example, the one for Cambridge, Massachusetts .

Plan for Continuity

Once you've analyzed your risks and estimated their impacts, you can begin writing your contingency plan. You'll need a plan for each of the risks you've identified. For example, suppose your manufacturing business is highly dependent on a grinding machine. If the machine became inoperable due to physical damage or a malfunction, your business might have to shut down temporarily. You draft a contingency plan outlining steps you will follow if your machine becomes unusable. Your plan, in turn, might include contact information for two companies that rent machines similar to yours.

When writing your contingency plan, be sure to identify specific people who will need to take action. For instance, suppose your firm employs a highly-skilled salesperson named Susan, who generates 50% of your firm's sales. If Susan left your firm or was unable to work for an extended period, your sales would plummet. You know a retired salesperson (Jim) who could step in for Susan temporarily. However, before you include Jim in your plan, you should explain the roles and responsibilities you'd expect him to fulfill and obtain his consent.

Once you've completed your contingency plan, be sure to share it with your managers and staff who will be responsible for implementing it. Ask them for their feedback, as they may think of a potential risk or impact you didn't consider.

Contingency Plan Example

Here's an example of how a company might use a contingency plan.

Tom owns Tasty Treats, a manufacturer of frozen prepared meals. The firm generates 60% of its revenue from sales of frozen pizza, all of which is made at a central location. Tom worries that his business could be severely impacted if a catastrophe occurs at the pizza manufacturing facility and he's forced to shut it down. Tom thinks his biggest risks are fire, windstorm, equipment breakdown, and an extended power outage, and that all have a high probability of occurring. He drafts a detailed contingency plan. Here are the highlights.

Ready.gov. " Business Impact Analysis ." Accessed Jan. 28, 2021. 

National Conference of State Legislatures. " Security Breach Notification Laws ." Accessed Jan. 28, 2021. 

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Sep 15, 2023

What Makes Up a Contingency Plan for Construction?

A contingency plan, in essence, is an alternative course of action that is set in place to counteract the detrimental impact of potential future events. In the construction industry, a contingency plan is of the utmost importance. With a bevy of factors influencing the successful completion of a project, it's critical to have a fallback plan in case things go awry. This article outlines the key components of a contingency plan in construction - risk assessment, plan development, plan testing, and plan maintenance.

Risk Assessment

Risk assessment is the initial step in developing a contingency plan. This process often involves the identification, evaluation, and prioritization of risks or uncertainties that could postpone, disrupt, or stall construction projects. Everything, ranging from natural disasters like hurricanes, earthquakes, and floods, operational risks such as equipment failure, unexpected site conditions, to financial risks such as inflation or market instability, needs to be taken into account.

To effectively assess risks, construction companies must review project plans, understand the local environment, and have a deep knowledge of the construction industry. They also need to take into consideration the project's timeline, stakeholders, budget, and objectives. An evaluative report that encapsulates all potential risks, their likelihood, and their potential damages forms the crux of this step. Not every project requires a deep dive, but every project would benefit from auxiliary plans.

Plan Development

With the risk assessment report, construction companies can now proceed to formulate a contingency plan. This plan should address each identified risk and present actionable countermeasures. The plan might involve alternative methods to carry on with the construction, reallocation of resources, or renegotiation of contracts.

In essence, the plan should be able to provide solutions and actions that will keep the construction project afloat should any of the identified risks materialize. Another key facet of the plan development phase is communication – the roles and responsibilities of each individual need to be sharply highlighted. Also, the contingency plan shouldn't be static- it must be flexible enough to accommodate changes that surface in the course of the project execution.

Plan Testing

Post-development, it is crucial to test the contingency plan. This typically involves various methods, like conducting drills or simulation exercises, to understand the practicality of the plan. Plan testing helps root out any flaws or snags in the devised plan. It also provides workers with an understanding and familiarity with the plan, enabling quick action during actual emergencies.

Moreover, feedback from the testing phase can be used to monitor the contingency plan’s efficiency and for further amendments, if necessary. For smaller companies, plan testing is done simply by executing on it. Plan testing is more beneficial for larger teams and areas where there is mixed dependencies.

Plan Maintenance

The final step in contingency planning involves the regular reconsideration and updating of the contingency plan. Construction projects are dynamic, and the associated risks can change over time. To ensure that the contingency plan remains relevant and useful, it is important to review and revise it regularly.

The same should be said of your other business practices. Regular maintenance includes incorporating changes in project scope, budget, or timeline, as well as shifts in the political, legal, or natural environment. Lastly, updates based on the learnings from the plan testing stages also form an essential part of the plan maintenance.

In conclusion, every construction project is unique, but a carefully thought out contingency plan can ensure that no matter the problem, the project can still reach completion in the most efficient manner.

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4 Steps to Creating a Business Contingency Plan

When audiences think of Back to the Future, they remember Michael J. Fox’s performance. Yet, Fox – and his iconic "life preserver" vest– wasn’t the first choice for Marty McFly.

Universal Studios actually filmed another actor as the main character for several weeks. When that didn’t feel right they switched to Plan B: Fox. The rest is history.

Having a Plan B, otherwise known as a contingency plan, makes continuity possible. Whether it’s for a movie cast or a natural disaster, having a contingency plan in your back pocket allows for quick shifts and flexibility when potential setbacks or issues arise.

A Deeper Dive: What Is a Business Contingency Plan?

A business contingency plan, or Plan B, is a backup plan you can use if there’s a disruption in your company’s operations. Because of COVID-19, our minds tend to jump to worldwide disasters, but Joe Spector, Founder and CEO of Dutch , warns that more common risks are issues like “data breaches, loss of staff or customers, or declining business relationships.”

And it’s because these issues are so common that they are often overlooked as needing a contingency plan. But disruptions, transitions, and adaptability take time and money, and having a plan in place will help mitigate any potential upsets so your business can continue to run as smoothly as possible.

Shifting From the Traditional Risk Management Approach

To ensure your company is ready for the unexpected, your leadership must adopt a strategic contingency planning process. It makes sense to have backup plans, but did you know that only 12% of business leaders considered their companies prepared for 2020? Because pandemics, natural disasters, and data breaches aren’t predictable, it’s critical to have backup plans in case any major disruption occurs.

Leaders are in unique positions to challenge traditional approaches and implement tools and practices that take a modern look at risk assessment and risk management. Mark Shinkman, Vice President of Gartner’s Risk and Audit Division, attributes the absence of COVID-19 contingency plans to antiquated methods. He explains, “This lack of confidence shows that many organizations approach risk management in an outdated and ineffective manner."

These outdated and ineffective practices involve department leaders assessing risks and creating contingency plans unique to their teams. However, this siloed approach fails to look at departmental risks that could impact the company as a whole. As a result, companies are ill-prepared to address crises that spread into other departments.

Traditional contingency planning favors department-level risk management, which can negatively impact the company.

Traditional Risk Management Implications

Most risks can impact your entire organization. If your departments work together, you can more easily understand these risks and develop a proactive plan. However, the traditional, siloed model will leave teams scrambling.

For example, unexpected turnover, furlough, and leave all affect staffing levels, which in turn influence a department’s ability to deliver on goals. If you don’t have a contingency or succession plan in place, other departments besides your People team may be affected.

This particular siloed planning process could result in:

• Disgruntled customers and lower renewal rates. Fewer personnel on the Customer Success teams translates to longer ticket times and phone queues, which could affect customer retention down the road.
• Extended timelines and frustrated customers. A shortage of software developers could significantly affect your ability to release features, fixes, and enhancements promised to customers and stakeholders. When promised fixes aren’t delivered, Customer Success representatives often take the brunt of customer complaints.

Looking at risks from a holistic view eliminates the traditional risk management tunnel vision. As a leader, you can make this happen. Encourage your departments to collaborate with others in the company so they can see the overlap in crises. With this high-level view, your departments will be better equipped to keep your company running in the event of a crisis.

To create a successful, aligned contingency plan, it’s important to analyze your potential risks, plan responses, and manage recovery efforts when crises occur.

1. Assess Potential Risks to Your Company

Contingency planning starts by acknowledging the risks that your company faces. After all, you can’t create a backup plan if you don’t know what you’re trying to overcome.

Invite department heads, team leads, and/or employees to anonymously participate in a risk assessment. Have respondents identify risks they believe are important and encourage participants to include both internal and external sources. Next, have them rate those risks on their likelihood and severity. Include a rating scale of one to 10, with one being low likelihood/low impact and 10 being high likelihood/high impact. It may be important to provide examples of each ranking to better calibrate results.

Once responses are in, gather leadership and additional department heads or team leads to review the responses and ratings. Use a risk assessment matrix or scatter plot to visualize the severity of each risk.

These visualizations can help your team identify urgent risks and determine an appropriate course of action.

Prioritize your results by reviewing the following:

• High impact and high likelihood: To ensure business continuity, your team should create a contingency plan immediately.
• High impact and low likelihood OR low impact and high likelihood: Contingency planning is useful but not urgent. Don’t prepare for these risks until you’re done planning for threats with high impact and high likelihood ratings.
• Low impact and low likelihood: Normal business operations are less likely to be impacted by these risks. While a contingency plan may not be necessary at this time, you should monitor these risks for potential impact and probability changes.

2. Consider Business Continuity Options and Their Implications

As you move forward with creating your contingency plan, consider how a particular course of action will target your crises and impact your workforce and company.

Acknowledging the trickle-down effect these risks—and your response to them—will have across your company, while being transparent in your collaboration practices, empowers your leaders to figure out how to respond on the department level. Furthermore, collaborating on crisis responses also provides your department leaders with an opportunity to voice concerns and share how each crisis would impact their teams.

Business Contingency Plan Template

For a business contingency plan example, let’s say that a few of your team members live in tornado country. It’s very possible that a natural disaster could affect them and their workflow, resulting in disrupted communication between team members and customers.

The customizable business plan template below can guide your team through problem solving your potential scenarios and responses.

Download your editable contingency plan template here .

3. Create and Practice Your Contingency Planning Guide

After collaborating with teammates and assessing potential risks, it’s now time to solidify your contingency plans.

As you compile your plans, make sure to include the steps your teams took to assess the risk, the various scenarios you drafted (even ones you may not have selected), and recommendations for how often leadership should review the plan.

You can go into as much detail as your team feels is necessary. Some companies might draw up a minimalist table view to make triggers and actions visible, while other companies may rely on thorough documentation to capture all aspects of their contingency plan.

How much detail you put into a guide will also depend on the factors in play. A data breach, for example, would involve specific team members and stakeholders with specific recovery strategies outlined. But a natural disaster that takes out the main office would involve a number of stakeholders and a broader plan to manage resources. Your approach will ultimately reflect the needs of your company and the complexity of the risk.

An additional (but equally important) component of your contingency planning guide is communicating it to and training your employees through mock simulations. Spector advises that your people should not only know their specific roles and responsibilities when the plan goes into effect, but also if and when adjustments are made “in accordance to changes in organizational processes and technologies.”

4. Revisit Your Contingency Plans

It’s important to revisit and refresh your contingency plans not only when processes and technologies change, like Spector mentioned, but also when positions are backfilled and roles and responsibilities shift.

You may also find that your team struggles to enact the plan. Shinkman warns that some people “tend to deal with emerging risks by just assuming they will go away and instead focus their attention on what is most important today.” But when those seemingly small problems aren’t addressed, they can quickly become larger, more serious issues down the road.

To successfully revisit your plans, cycle back through the above steps with your team to identify the best course of action. If you need to reassess a threat that wasn’t high risk before but has since become urgent, enlist your leadership team to talk through where the risk falls now. Then, proceed to create a new contingency plan or revise your existing one.

A Documented Contingency Plan = A Proactive Approach

Although you don’t want to be fear-driven, remember that disruptions can happen at any time. It’s therefore important to have a plan – any plan – in place.

You might opt for a stable enough plan that’s ready to go at a moment’s notice. You may choose to invest more time in making your contingency plan iron-clad. That’s the beauty of revisiting and refreshing your plans: risks and responses constantly change, and you have the ability to shift and further solidify your reactions.

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How Can Businesses Plan For Contingencies?

Bill Gates, Steve Jobs, and even Jeff Bezos had a backup plan. When it comes to running a business, let alone an empire, you need to have a contingency plan. A solid Plan B is the best way to tackle any situation – giving you the ability to adapt to unanticipated circumstances well and resume your plans quickly.

You must have a contingency plan in place since your clients and consumers depend on you to deliver as promised. There is no way to stop all accidents from happening, but with some careful planning, you can lessen their effects.

Companies and individuals may create a contingency plan rather than waiting for the worst-case scenario to occur. This makes it possible to carry on regular corporate activities as smoothly as possible.

In this article, you will discover what a company contingency plan is, why it is important, and a step-wise guide on planning for contingencies.

What is a Company Contingency Plan?

A company uses a contingency plan as an operational strategy to deal with potential future occurrences that may or may not impact the firm. Usually, companies develop a contingency plan to address a negative incident that could potentially damage the company’s reputation or hinder its ability to carry out business operations. There are, however, proactive backup plans, such as what to do if the company receives an unanticipated infusion of cash or other resources.

Contrary to risk response plans, which are more of a response to a risk incident, contingency plans are proactive strategies. To prepare for these disruptive events, a company draws up a contingency plan. This way, you’ll be ready if and when they occur.

Any company makes plans to ensure that its product or service will be successful in the market, but a market is far from steady. Every organization should have a business contingency plan in place so that it can prepare for both positive and negative contingency management.

From fires to bankruptcy or ransomware attacks, there are thousands of issues that can go wrong. One of the latest examples of contingency plans is a ransomware attack on Ireland’s Healthcare System in 2021. The estimated cost of recovery operations for the attack alone was more than $100 million. Ireland, fortunately, did have some effective business contingency plans in place. Despite the incident’s negative effects, several mitigating strategies kept the attack from getting worse.

Importance Of Contingency Plans For Businesses

Having a wide perspective is the greatest way to comprehend contingency planning. People can sleep peacefully when businesses have crisis contingency management plans in place – knowing that you’re prepared for any eventuality is comforting.

You may overcome your apprehension about the future if you adopt a future-focused mindset. Planning for emergencies is a proactive approach as opposed to being defensive. It’s a practice of finding methods to succeed rather than just getting by.

A contingency plan is essential because, without one, your company is exposed to a wide range of preventable dangers. A contingency plan is necessary for any firm for the following reasons:

Minimize Damage

You are more equipped to respond to situations and reduce harm when you have a plan B in place. For instance, if you already have a disaster management strategy in place, you can immediately implement it if your area experiences an earthquake. This, therefore, enables you to leave the facility promptly without risking your safety or the safety of your colleagues.

Better Response

The increased responsiveness that planning offers is its main benefit. A contingency plan spells out the precise actions that must be taken to solve the challenge, allowing you to respond to the situation swiftly and without overthinking it or panicking.

Increases Confidence

Things are much simpler to handle if you have a strategy in place for handling whatever issue life throws your way. The confidence you and your team have when you have a contingency plan in place comes from knowing what to do in the event of an emergency. Having a plan in place lessens uncertainty and the fear of the unknown.

Bounce Back Fast

Being prepared for a calamity allows you to handle any obstacle quickly and return to normal operations, preventing any unnecessary delays in your development. Therefore, contingency plans ensure that your progress is not impeded for any longer than necessary.

A Project Management Contingency Plan

Contingency planning is frequently a component of risk management in project management. An outline is all that a project plan is, as any contingency manager is aware. Projects occasionally go above certain boundaries due to unforeseen developments and dangers. The better a project manager can plan for those risks, the more successful the project will be.

However, risk management and emergency preparation are not the same. A risk management plan is made by project managers using a variety of tools and strategies that fall under the category of risk management which comes under project management.

When planning for contingencies, you must first determine the risks that might affect your company. With the assistance of your team, this may be accomplished at the finest. Organize a brainstorming session where you may discuss current events, prospective projects, and potential obstacles.

Mitigation Vs Contingency Plan

A mitigation strategy makes an effort to prevent the likelihood of the risk occurring or the effect of the risk in case it transpires. It is put into action in advance. A contingency plan outlines the actions to be taken to lessen the effect of the identified risk should it materialize. A contingency plan should be considered the final line of defence.

Although both contingency planning and mitigation tactics fall under the category of risk management, there is a significant distinction between the two. By developing a plan to lessen a possible danger, you decrease the likelihood that the risk will ever materialize. For instance, by creating a stakeholder management strategy, you reduce the likelihood that your stakeholders may be unhappy with certain aspects of your project.

Planning For Contingencies – A Step-by-Step Plan

Recognize the risks.

Use your knowledge of the surrounding environment and your expertise to identify the risk variables that are present before beginning the project contingency planning process. Though you shouldn’t think you can reproduce an existing contingency plan precisely, you might be able to take inspiration from prior, comparable projects that your company has accomplished. You need to think about whether there is anything unique about this project that adds new risks or increases the likelihood of existing dangers.

However, it is also hard to pinpoint every single potential risk factor. Making a strategy that is appropriate for the situation is the ultimate objective of your contingency planning. Even if you were to discover hazards with an extremely low possibility of happening, making plans for them wouldn’t be a good use of your time. Then go on to further analyze in-depth the dangers that are realistic and reassuringly probable.

Analyze Risk Severity

You can choose which hazards are the most troublesome for your project once you’ve identified the dangers you need to plan for. Making a backup plan for every conceivable scenario simply wouldn’t be a good use of time or money. Use your discretion to decide what is most important. You should discuss your new strategy with your superiors if it differs dramatically from what you’ve done in the past.

Include your team in this phase of the process. You have time to come up with solutions when you plan ahead, which is one of its advantages. Ask them what they did to fix the issue and what they would have done differently if it had occurred previously.

Build Contingency Plan

Now that you are aware of what needs to be planned, it is time to utilize your imagination, resourcefulness, and expertise. Usually, several solutions are available for the challenges you may encounter. Although some answers might not be immediately apparent, each strategy will have its own benefits and drawbacks. Including a small group of other individuals in this process is a terrific idea since you may learn from any ideas and experiences they may have that are applicable.

These individuals don’t always need to be project stakeholders. The ideal person to use as a sounding board or to sense-check your strategy before attempting to have it authorized may actually be someone who has no financial interest in the business. Their separation from the undertaking can enable them to draw your attention to problems you hadn’t thought about or even to suggest solutions you might incorporate into your design.

Get Plan Approved

Once you are satisfied that you have a sound contingency plan, it is likely that you will need to go through a review and approval procedure, whether it is an internal process or involves other stakeholders. It is ideal to have your contingency plan in place when the overall project plan is approved. In fact, you might need to submit both the project plan and your contingency plan at the same time.

The ideal course of action is to have a contingency plan in place when your project plan is authorized. If the project plan proceeds without a contingency plan, the business is at risk. Best practices are recommended for a reason, and starting a project without a contingency plan in place is not one of them.

Share the Plan with the Team

There is no use in having a plan that just exists on paper. The effectiveness of your plan will depend on how precisely you communicate it. To put a contingency plan into effect, your team has to understand exactly what is expected of them. Your team should review and approve your contingency plan. By letting others in your company know about your strategy, you not only assist them to be ready but can also get insights from their comments.

Make sure to assign these tasks, give them the appropriate priority, and ensure that your team carries them out if the plan requires certain preparations. If you discover that certain measures were not implemented during a calamity, it would be pointless to issue a plan that calls for those activities to be taken. In the case of a cybersecurity breach like a ransomware attack, a security analyst could, for example, recommend improved methods for safeguarding your information systems.

Recheck Your Plan

You already know that you have a solid contingency plan in place, so if the worst should occur, you’ll be prepared to handle it. But it’s pointless to think that you’ve done everything well. If your project evolves, even the best-laid plans may quickly become irrelevant. A constant aspect of this procedure should be updating your contingency plans.

As new information becomes available, you might also need to revise your backup plan. In a perfect world, you would know all you needed to know right away. No matter what stage your project is at, always remember that your backup plan must be appropriate for the situation.

Incorporate periodic contingency plan reviews into your project plan to ensure that you do not skip these crucial check-ins.

Track Your Contingency Plan

Constantly preparing is crucial when it comes to keeping track of your contingency plan because it requires maximum effort. Consider new dangers or changes, such as new personnel or an evolving company environment. Make sure to bring up the contingency plan for evaluation by any new executive team members.

Changes in personnel, operations, and technology might render the strategy ineffective, necessitating some adjustments. Before a crisis arises, you should make the plan known to everyone who could be impacted by it and specify everyone’s roles and duties.

Concluding Thoughts

It might take a lot of work to develop a contingency plan, but you’ll be thankful you did if you ever need to employ it. It is important to make a solid contingency plan, but you also need to ensure that you continuously update it.

Are you ready to begin? Business contingency plans assist you in preparing your firm to deal with unforeseen circumstances. Provide your staff with a practical strategy on how to manage any problem that may emerge.

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Top 10 Leadership and Learning Resources

Article by Ken Thompson , last updated November 2020

I am delighted to share my Top 10 Leadership and Learning Resources

The resources are listed in purely alphabetical order: 

• Businessballs
• Center for Creative Leadership (CCL)
• Chief Learning Officer (CLO) Magazine
• CIPD Learning
• Management Study Guide
• Skills You Need
• Training Journal
• Training Magazine
• Training Zone Magazine

All content is free but in some cases you will need to register or provide an email to access the content.

A short overview of each resource with web links and recommended "Standout Sections" follows below:

1. Businessballs

Businessballs is a free ethical learning and development resource for people and organizations, run by Alan Chapman, founded and based in Leicester UK.  Businessballs.com launched at the end of 1999. The concept began a few years earlier as an experimental online collection of learning and development ideas. The website is now used by about a million people each month. Alan originally created the Businessballs name for juggling balls in his training and development business.  The philosophy of the website is intended to be ethical, practical, innovative, compassionate and enjoyable.

Website: http://www.businessballs.com

Standout Section: eLeadership Academy grade

Weblinks:   http://www.accipio.com/eleadership/

Businessballs has partnered with Accipio, an Institute of Leadership and Management (ILM) and Chartered Management Institute (CMI) centre, to offer FREE audio-visual interactive eLearning modules aligned with internationally recognised qualifications (ILM or CMI). Modules include the Five Dysfunctions of a Team, Leading Change and Leadership Behaviour. Accreditation fees apply.

2. Center for Creative Leadership (CCL)

Founded in 1970 as a non profit, CCL is a top-ranked global provider of leadership development with 10 office locations and 500+ faculty and staff members.

Website: https://www.ccl.org/

Standout Section: Articles, White Papers and Research Reports grade

Weblinks: 

https://www.ccl.org/articles/  

https://www.ccl.org/articles/article-type/white-papers/  

https://www.ccl.org/articles/article-type/research-reports/

A wealth of great "Thought Leadership" material including Serious Games and Gamification.

3. Chief Learning Officer (CLO) Magazine

Chief Learning Officer is a multimedia publication focused on the importance, benefits and advancements of a properly trained workforce with award-winning content catering specifically to executives in the enterprise learning market.

Website: http://www.clomedia.com

Standout Section : Latest - Learning Delivery grade

Weblinks: http://www.clomedia.com/latest/learning-delivery/

Excellent and concise articles on current hot topics such as graduate training, corporate universities, experiential learning, evolution of e-learning and unconscious bias training effectiveness.

4. CIPD Learning

The CIPD is incorporated under Royal Charter and the only professional body in the world that can confer individual Chartered status on HR and L&D professionals.

Website : https://www.cipd.co.uk/learn

Standout Section: Knowledge Hub grade

Weblinks: https://www.cipd.co.uk/knowledge

Factsheets, Podcasts and Reports on the following important leadership areas:

• People management fundamentals
• Strategy and planning
• Organisational culture and behaviours
• The Changing context of work

5: Management Study Guide

MSG is a leading global provider of management & skill based education addressing the needs of over 1.2M members across 198 countries  with over 150 courses prepared by top notch professionals from the Industry.

Website:   http://managementstudyguide.com/

Standout Section : Library grade

Weblinks: http://managementstudyguide.com/all-subjects.htm

A rich library of articles covering Management Basics, Management Functions, Organizational Behaviour and People Management.

6: Mind Tools

Established in 1996, Mind Tools helps more than 25,000,000 people each year from many different levels within organizations – ranging from senior executives and business owners to young professionals and career-starters.  Many top, global organizations also use Mind Tools material to increase productivity, improve management and leadership skills, and support organizational development initiatives.

Website: https://www.mindtools.com

Standout Section: Toolkit - Leadership Skills grade

Weblinks: https://www.mindtools.com/pages/main/newMN_LDR.htm

Great Practical tools for leaders covering General Leadership, Understanding Power, Leadership Styles, Emotional Intelligence, Becoming a Leader, Young/Future Leaders and Crisis and Contingency Planning. 

7. Skills You Need

SkillsYouNeed is passionate about providing high quality information and resources that help you learn and develop the skills you need to make the most of everyday life. For the L&D practitioner, SkillsYouNeed offers comprehensive sections on Personal Skills, Interpersonal Skills, Leadership Skills and Learning Skills.

Website:   https://www.skillsyouneed.com

Standout Section : Leadership Skills grade

Weblinks: https://www.skillsyouneed.com/leadership-skills.html l

Great resource on the 4 core areas of Leadership:

• Understanding Leaders
• Planning and Organising Skills
• Leading People
• Change Management

8. Training Journal

TJ is the largest L&D online community and content publisher for training professionals. TJ hosts the well-respected TJ Awards and the groundbreaking #TJwow discussion webinars. With 50 years in publishing, TJ is one of the most experienced L&D publishers in the market.  

Website:   http://www.trainingjournal.com/

Standout Section : Blogs grade

Weblinks:  http://www.trainingjournal.com/blogs

A fantastic array of blogs by numerous practitioners in the field covering important 'state of the practice' topics in L&D and leadership.

9. Training Magazine

Training magazine is a 53-year-old professional development magazine that advocates training and workforce development as a business tool. The magazine and its web site delve into management issues such as leadership and succession planning; HR issues such as recruitment and retention; and training issues such as learning theory, on-the-job skills assessments, and aligning core workforce competencies to enhance the bottom-line impact of training and development programs. All of the content is written exclusively for the site by training, human resources, and business management professionals from a variety of industries.

Website: https://trainingmag.com/

Standout Section: Podcasts grade

Weblinks: https://trainingmag.com/podcasts

A series of 7 podcasts, produced by Ottawa-based writer/audio producer Kevin McGowan in partnership with Training magazine, includes one-on-one interviews with fascinating people in the training/learning and development world. The podcasts focus on training technologies, projects, career paths, and more and aim to provide listeners with a unique view into training and knowledge development.

10. Training Zone Magazine

With over 100,000 members, TrainingZone.co.uk is the UK's largest online community for L&D and training professionals.

Website: http://www.trainingzone.co.uk

Standout Section: Hot Topics grade

Weblinks: http://www.trainingzone.co.uk/hot-topics

Well-written articles on topical themes in Leadership, Behaviours, Culture and Communication.

Please email me your favourite leadership and learning resources and I will add your suggestions to this list.

And a member of our Team will be in touch

We have 150+ articles on a wide range of Business Leadership Topics Explore articles

More about Ken Thompson

Ken is a practitioner, author and speaker on Leadership, Collaborative Working, High Performing Teams, Change Management, Project Management and Business Acumen. His work has featured in major publications including The Guardian , Wired Magazine, The Huffington Post and The Henry Ford Magazine. Ken has also spoken at many international events including TEDx, the Institute for Healthcare Improvement (IHI), Learn Tech (London) and NASA.

Ken is Founder of Business Simulations Ltd.

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Contingency Plan Examples

40 detailed contingency plan examples (& free templates).

Good strategies always involve a contingency plan in case the original plan backfires. In some cases, the original plan may not be as successful as you expect which is why you need a contingency plan example to achieve the same goal . We have heard the term “Plan B” before and this in its simplest way, is a contingency plan.

Table of Contents

• 1 Contingency Plan Examples
• 2 What is a contingency plan?
• 3 Contingency Plan Templates
• 4 When to use a contingency plan?
• 5 Using a contingency plan example in risk project management
• 6 Business Contingency Plan Templates
• 7 Steps in contingency planning
• 8 Creating your contingency plan
• 9 Contingency Plan Samples
• 10 The challenges that may come with contingency planning

What is a contingency plan?

The steps taken by an organization when an unexpected situation or event occurs is a contingency plan. A contingency plan example may be positive like when there’s an unexpected surplus in the cash flow. But more often than not, the contingency planning process mostly refers to negative events.

The events which might have a bearing on the organization’s financial health, reputation or on its ability to continue with business operations. Such events may include natural disasters, fire, network failure, and a data breach, to name a few.

Having a contingency plan template helps you make sure that there’s always a continuity in the business. Most of the bigger business organizations have sets of business contingency plan templates for various potential threats. These undergo extensive research and the resulting appropriate responses get subjected to full practice even before the crisis occurs.

You can consider a contingency plan as a proactive approach as compared to crisis management, which is more of a reactive approach. Having a contingency plan ensures that you’re always prepared for any eventuality. Conversely, a plan for crisis management enables you to control the response after the eventuality occurs.

Contingency Plan Templates

When to use a contingency plan?

Also, keep in mind that the design of a contingency plan template is only for risks that can you can identify and not for unknown or unidentified risks. This is for the simple reason that you cannot make a plan if you don’t know the risk.

It’s also worth noting that contingency plans don’t only exist in anticipation should things go wrong but you can also create one to make the most of strategic opportunities.

For instance, you have come to know of a new type of software for training that’s about to get released soon. Should this occur during the project, you can create a contingency plan on how to include this into the training stage of your project .

Using a contingency plan example in risk project management

As mentioned earlier, a contingency plan example responds to a negative event that might affect or tarnish the reputation of an organization or its financial standing. In business, however, a business contingency plan template isn’t always negative. There are cases of positive contingency plans too.

Also, keep in mind that the contingency planning process is a proactive strategy, unlike crisis management which is a reaction to something that has happened. A contingency plan accounts for any disruptive events to ensure that the company is always prepared if and when such events should occur.

Contingency plans are usually part of the risk management department and project managers should know that the plan is simply an outline. However, there are times when the project may extend beyond this. This means that the manager can be more prepared to make changes in the plan if he deems it would be more effective.

Risk management isn’t the same as the contingency planning process. Risk management is more about establishing, assessing, mitigating, avoiding, sharing, transferring, and accepting risks, whereas a contingency plan focuses on developing steps for when a risk occurs. But they share a common aspect. They both describe the steps to take in such an occurrence.

In its simplest form, a contingency plan definition is what you should do when an unexpected event takes place. Simpler still is “What if….?”, then creating an outline of the steps that answer this question.

Business Contingency Plan Templates

Steps in contingency planning

Project management always involves several entry points for risks that you have to consider for a contingency plan example. Here are some risk factors that you should take into account for a contingency plan template:

• The physical aspect where losses can happen caused by damage to facilities, equipment or information because of natural disasters or an accident.
• Technical issues may be a risk factor too, where the system stops functioning as needed for the delivery of the project as scheduled and within the budget.
• Human resources can be another risk too as teams may leave projects, get sick or get terminated.
• In a much larger scale, risk factors beyond the project manager’s control are social and political changes. As an example, you can work with a contract which can drastically change depending on who’s in control. Nothing remains stable with risk factors. Communities can even protest against projects and bring them to a halt.
• There are also liability issues where there are potential threats in the form of compensation plans and legal actions.

Here are the basic steps in the contingency planning process:

• Make it a point to know which resources can you use in the event of an emergency and in which part of the contingency plan you can apply these resources.
• Identify important dates that, if you miss, might negatively affect the plan. For instance, getting approval from committees which rarely meet.
• Know your plan. Check its weaknesses and strengths. Identify slack which you may find.
• Check for any points in the plan where you can apply alternative routes and evaluate each scenario to make your plan more flexible.
• Use your knowledge and experience in discerning patterns in the ebb and flow of the activities in your project to make it more efficient.

Creating your contingency plan

You need a lot of planning and research when creating a contingency plan example. But planning ahead, with each plan makes things easier for you. When creating one for your company, follow these steps:

• Identify your resources and prioritize them Do research throughout the organization so you can identify then prioritize the integral resources in your organization.
• Identify the most significant risks You need to identify any potential threats to the researched resources. If you need to, meet with executives, and employees to get more a holistic picture of how events can affect your resources. To be more precise, bring with you a consultant or a specialist in the identification of risks.
• Draft a contingency plan template Although you may come up with plans for each of the risks individually, it’s recommended to begin with the threats you consider high priority. This refers to the ones which have a high likelihood of occurring and would have the most significant impacts. As time goes by, you may start working toward coming up with plans for the lower-priority risks. When drafting plans for identified risks, start asking yourself about the steps to take so that the organization can go back to normal operations. Take into account factors like employee activity, communications, timelines , and staff responsibilities. Based on these, you can then make a plan for each of the risks.
• Share the plans Make sure that all employees and stakeholders have access to each plan as soon as you’ve completed them and had them approved. You may want to consider using a mobile application for this very important step. This could make the contingency plan together with similar documents directly available to all of the employees through their mobile service. This method also ensures that every employee has easy access to the updated plans for when the need arises.
• Maintain the plans As the organization undergoes changes, make sure that you reflect such changes in your business contingency plan template. There’s also a need to rehearse the plan with stakeholders regularly so that the key players know their roles and responsibilities.

Contingency Plan Samples

The challenges that may come with contingency planning

Managers will always get confronted with challenges that they should consider before and while creating contingency plans. These challenges include:

• Only focusing on “Plan A” By nature, people only want to work on a single solution. This may be the reason why a contingency plan doesn’t get the proper attention it deserves. They all hope “Plan A” succeeds and they think that focusing too much on “Plan B” might potentially be damage their success. As managers, they should stress how important a contingency plan is as it serves as your safeguard to help facilitate success instead of obstructing it. This means that the contingency plan should never get shelved. Instead, you must make it readily accessible.
• A small probability of using the plan Because of the small probability that you will ever use the contingency plan, many believe there’s no urgency in creating one. That means the plan could find itself at the very bottom of the company’s list of tasks if anyone will create it at all. There is a need for this plan for any project, even if the company has to invest a little more in it. When you decide to create a comprehensive contingency plan, you will feel the pay off when you end up needing it.

More Templates

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Implementation Plans

Small Business UK

Advice and Ideas for UK Small Businesses and SMEs

Why every small business should have a contingency plan

Here, Andrew Clough, founder and managing director of The Brew, explains why it is important for businesses to have a contingency plan.

It’s been an eventful year for the UK, and London in particular, with a succession of high-profile incidents reminding us how situations can change without warning. From terrorism to fire, extreme weather to cyber-attacks; it gets you thinking about how your business would cope if it was affected by something similar. Would your staff know what to do? Would you be able to keep trading?

It was this realisation that drove me to start building a contingency plan for my business, The Brew, a chain of five co-working spaces across East London. We’ve grown quickly over the last five years and when that happens, you can end up with a situation where a lot of critical information exists only in your head. As the founder, you always know what’s going on and how to do things, but what would happen if you weren’t there?

Putting a contingency plan in place not only gives you the peace of mind that everything could continue in your absence, or without key members of your team. It also makes for a better run and more organised business. Forcing yourself to have everything documented centrally builds a greater awareness of roles and responsibilities across the organisation, while also making holidays less of a challenge!

Having just been through the process with The Brew, here’s my advice on the steps involved:

What are your biggest risks: Start off by identifying the key risks that could affect your business, focusing on those that are most likely to happen. There isn’t much value in preparing for very rare events, as the chances of being affected are very small. We decided that the biggest realistic issues we could face would be the internet going down, or being hit by a cyber-attack. We would also have serious problems if numerous employees were unable to get into work for some reason. With over 2,000 members, that would leave us with an operational and communication headache on our hands.

Document everything: Put together an operational guide for your business, outlining everything you would need to know to keep it running, such as who your suppliers are, how and when they are paid, and everything else that happens on a daily/weekly/monthly basis. As part of the same process, not only outline the roles and responsibilities of every senior member of staff, but scope out the daily and weekly tasks, so a replacement could assume those responsibilities very easily.

For example, we have fully documented our website, which is one of our most important marketing channels, so other employees could find out who hosts it, designs it and how is it updated etc… These documents prove to be a great handbook for new members of staff coming in, and ensure your processes remain consistent. We also keep copies offsite in case our premises aren’t accessible, following an incident.

Have back-ups in place: Like most businesses, the internet is absolutely critical to what we do, so we have multiple back-ups in place in case our normal supplier went down. Cyber-attacks and data breaches are one of the biggest threats at the moment, which means backing up company data every day is non-negotiable, ensuring copies are kept offsite. So if, for example, a ransomware attack shut down your systems – as happened to thousands of businesses recently with the WannaCry virus – you would know that all your files are safe elsewhere.

Alternatively, keeping files stored in the cloud will ensure they can always be accessed. Another key contingency plan for the internet is ensuring every single member of staff knows the basics of where the router is, how to restart it, who your supplier is, what your customer number is etc. This information can be in your handbook (kept offline) so that if there are any issues, anyone in the business can work on restoring your connection and minimising any downtime.

Have a crisis plan in place: You should also have a plan in place for emergencies, including employee roles in such a situation and the key actions that would need to be taken. I remember following the 7/7 attacks in London, I suddenly realised that we didn’t have all the contact numbers of staff easily accessible anywhere, so we now have those ready, as well as next of kin.

Work through the likely progression of events, in terms of how you would communicate to staff and customers, whether via the website, social media, or directly. Also run through the absolute essentials you would need to keep operating, even if it is at a limited level. With The Brew, our members rely on us to keep their businesses up and running, so it would be unacceptable for us to be unprepared.

Nobody likes to think about being hit by something that could derail their business, but it’s a vital part of the job. And once you have a plan in place, you’ll benefit from the peace of mind of knowing you’re prepared, whatever the world throws at you.

Andrew Clough is founder and managing director, The Brew

Further reading on your contingency plan

Disaster recovery plans and small businesses

Owen was a reporter for Bonhill Group plc writing across the Smallbusiness.co.uk and Growthbusiness.co.uk titles before moving on to be a Digital Technology reporter for the Express.co.uk. More by Owen Gough

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