6 Critical Contingency Plan Steps

Specify how often the plan should be reviewed and updated and identify who’s responsible for this process. Identify backup personnel for each key role in case primary team members are unavailable. During the COVID-19 pandemic, an adverse event affecting global logistics, the coordinator would have implemented alternative sourcing plans to maintain production despite shortages. Having a structured template can be the difference between a swift recovery and prolonged downtime. The gap highlights the need to create practical, well-communicated plans that are ready for execution.

Free Contingency Plan Templates

Many white-collar jobs were sent home for employees to do their job from the safety of their homes. Other businesses, such as restaurants, had to pivot to expanding their take-out operations and slowly opening up dining experiences. Let’s look at some examples to illustrate better why contingency plans are necessary and how businesses reacted.

• It outlines the steps that will be taken and the resources that will be mobilized in an emergency.
• If it happens that everyone gets sick on the same day, you need to have a plan in place to address the issue.
• Through the lens of practical scenarios, the theoretical becomes tangible, and the preparation proves its worth.
• If you aren’t sure who should be included in your brainstorming session, create a stakeholder analysis map to identify who should be involved.
• These tools empower businesses to respond swiftly and maintain control during challenging situations, ultimately enhancing their ability to manage crises effectively.

Create a list of risks for each process

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. 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.

These objectives outline how quickly you must restore each function to avoid consequences. For example, your payment processing system might have an RTO of just a few hours, while your marketing analytics could be down for days with a less severe impact. Risk management, which often incorporates integrated risk management principles, reduces the likelihood of issues. Contingency planning, on the other hand, prepares you to respond when problems occur. A contingency plan should be looked at as a living document and updated as needed. Your business needs will change over time and so will its obstacles and risks.

A Step-By-Step Guide to Creating A Contingency Plan

Give yourself about a week to identify the operational areas essential for business function. You likely already know what these areas are, but you want to do enough research to identify them all. Make sure the parties involved know what they’re responsible for in the plan, that way you can execute the plan seamlessly should the worst-case scenario occur. For example, if your business operates out of a storefront, keeping your storefront up and running is a critical area of your business’s success. Maybe you launch a new product that attracts more interest than you thought, and you need to deal with higher in-store traffic and a lack of products to satisfy the market. While it is a positive situation that will draw in more revenue, it can still have negative repercussions for your business if you don’t deal with it when it happens.

steps to create a business contingency plan

If it happens that everyone gets sick on the same day, you need to have a plan in place to address the issue. This could mean having a temporary staffing agency already vetted out for help or having the employees who are on duty do double duty, taking on additional tasks to get the job done. Designate a single point of contact for external communications to ensure consistency in messaging. Your team’s insights can uncover overlooked details and lead to valuable improvements. List key personnel, vendors and emergency services, including their roles and updated contact details.

• You’ll need to adapt it as new risks arise and to ensure it still makes sense for your business needs.
• Apple later apologized, offered discounted battery replacements, and introduced a feature allowing users to disable performance throttling.
• This process helps an organization prevent losses before they occur and aids in assessing whether or not certain risks are worth taking.
• United Airlines faced public outrage when a passenger was forcibly dragged off an overbooked flight, with videos of the incident going viral.
• Having a contingency plan for business helps you stay prepared and ready to adapt.

Boost productivity and team collaboration with Zoom AI Companion, available at no additional cost with eligible paid Zoom plans. Ideally, you should update your BCP at least once a year — or anytime there are big changes in your business, technology, or external risk. 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. In most cases, the plans in the document depend on the needs of the company.

For businesses and some individuals, minimizing the effects or damages becomes a number one priority when uncontrollable forces disrupt business operations and tasks. When problems such as natural disasters and security breaches strike the enterprise, business owners, together with their team, come up with approaches to amend the situation. In many cases, entrepreneurs look at emergency contingency plans as the action plan for the current predicament. This tool aligns methods to lessen possible business losses and other dilemmas.

Risk management is a proactive approach that companies use to prevent loss or disasters. So rather than being reactive like a contingency plan, a risk management plan looks to stop adverse events from happening in the first place. A business impact analysis (BIA) identifies and evaluates the potential effects of interrupting critical business operations due to a disaster, accident or emergency. It helps develop recovery strategies, examples of contingency plans in business prioritize resources and develop plans. It identifies critical resources and sets communication protocols to avoid delays. For example, let’s say you’ve identified a potential staff shortage as a likely and severe risk.

In this article, learn how to create a contingency plan for unexpected events and build recovery strategies to ensure your business remains healthy. 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.

An example of this could be the Department of Justice’s post-disaster recovery plan. Once you’ve come up with a desired plan of action, it’s time to get approval from stakeholders and management. If you’re creating both department-level and company-wide plans, this is especially important.

Contingency planning and risk management are complementary organizational strategies that serve different purposes. Get their feedback on potential risks and other factors that may impact guidelines in the plan. Having executive support from the start ensures the plan put forth is approved and also can motivate those at the department level to buy-in as well. Take two to three weeks to brainstorm the scenarios you’re going to create plans for.