Contingency plans are essentially your “Plan B” or what you will do when Plan A fails or is no longer an option. Contingency planning is part of a comprehensive Risk Management plan. It allows for alternative courses of action to be implemented so the business can adapt to the current situation and remain in operation with little to no disruption or loss of revenue.
This is Part 2 in this two-part series on Continuity and Contingency Planning. My goal is to get you thinking about your Risk Management and how to continue operating your business in the event of an unexpected emergency. While the Continuity Plan lays out the path for getting the business back on its feet and operating as quickly as possible after an unexpected event, the Contingency Plan determines what alternatives exist to overcome the event.
Why You Should Have a Plan B
Every contingency plan starts with the question “What if?” What if X or Y happens?” or “What if X or Y doesn’t happen?” “How will we respond?” “Are there things we can do to prepare?”
How does your business start to recover from a natural disaster like fire, flood, or earthquake? What about work-site incidents, personnel problems, data breach or data loss? A good contingency plan takes into account management, communications, finances, safety, security of personnel, etc.
Let’s say two business owners (you and your business partner) decide to attend an industry trade show in Las Vegas. You both book the same flight and there is a mechanical failure and the plane crashes killing all passengers onboard. Your business just lost the two principals. Could your business survive? What, if any, contingency plans are in place?
Similar situations happen more often than you probably imagine. One case study involves Cantor Fitzgerald, a prominent financial services company, which lost almost 70% of their employees in the September 11 attacks on the World Trade Center in New York. They had contingency plans in place that allowed them to get their business back up and running within a week.
You can’t predict or prevent all disasters, but you can certainly brainstorm the potential impacts and determine your course of action.
Every business runs on a set of business processes. Some of the most common are Procurement, Sales/Distribution. and Customer/Client Acquisition. Every business – whether you are a doctor, a dog walker, or a donut maker – follows some form of these processes in the execution of the business. By understanding the major processes and all of the minor, sub-processes that make up the majors, you can start to see points of weakness or vulnerability. Those vulnerabilities are where your contingency plans come into play.
Consider your business processes and the expected workflow; you should identify the “what-ifs” that could disrupt that flow. These are the exceptions to the rules. An essential piece of machinery breaks down, a railroad strike or walkout, or a disruption to internet access could spell disaster. What other options do you have? What options for distribution and delivery would you need to implement to maintain your schedule? Do you have other machinery that can do the same task in a pinch? Hopefully, you have an off-site data storage plan. What will it take to implement a full data recovery? When was the last time data was backed-up to the off-site storage?
By identifying the areas of risk in your business, analyzing the potentiality and severity of the impacts, and then coming up with alternative courses of action, you can mitigate these risks and ensure your business is prepared for any threat or disaster.