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Contingency Planning

By: Lisa Koning - Updated: 28 Feb 2013 | comments*Discuss
Contingency Planning

Contingency Planning is about planning for when things go wrong. It isn’t pleasant and it can be tempting to try and ignore it. But just as unfortunately events will happen, so to is Contingency Planning a necessary part of a managers role.

It might be called a back-up strategy, a worst-case scenario plan, or simply a Plan B, but contingency planning means being prepared for when things don’t go as we'd planned. Such as when we go on holidays, we don’t like to think about things going wrong, that our bags might go missing, our passport stolen or our wallet lost, but to ensure our vacation isn’t spoilt, we might take out insurance. We might even hide some money in our socks just in case! That’s contingency planning.

Consider the Risks of the Business

For Contingency Planning to be effective, a manager needs to ensure that they have considered the possible risks to the business and planned contingency for the most pressing risks: and these are the ones that are likely to occur and will have a big impact if they do. Thorough analysis is necessary to understand the risks that the business is exposed to. There will be a variety from internal and external factors: internal factors can be dependency on Information Technology (IT) or people (to name but a few), external factors might be the economy or market conditions (again to name a few). Some risks will be mitigated – prevent from happening, others are acceptable to live with, but need action to occur should it happen. The type of action is document in the contingency plan.

IT Contingency Planning

One typical area that businesses often have contingency plans for is IT. We live in an information age and information to a business is highly valuable. The protection of this information is of immense importance and businesses spent millions every year to ensure that this information is not placed at risk of loss or corruption.

Businesses quickly grind to a halt without their technology. How many businesses today have employees that do not use technology of some sort? Should a network or system go down, the cost to the company is high. Think of all the employees unable to use their computers. No emails being send. No reports being written. Not only does it mean downtime when the business cannot operation, but it may put the company in a difficult situation if important records are lost. Consider a bank and the cost of having its branch systems unavailable even for a short period of time. And should a bank loose bank records? Businesses with such high risks ensure they are mitigated, or avoided. This is the role of the contingency plan, to avoid such unacceptable situations occurring. Such a contingency plan can be extremely expensive and the process to manage the contingency plan can be just as complex as the standard operating processes. In some instances, it may mean having duplicate hardware and systems available to takeover in the even of failure.

Do we Really Need a Contingency Plan?

Sometimes contingency planning gets put on the backburner; it hasn’t happened yet so lets keep fingers crossed and hope that it won’t! Contingency planning is like insurance, it's expensive and if everything goes to plan you begin to question was it really worth it. Unfortunately, such as bags going missing on holidays, things do and will happen, often out of our control. And it is only when they do, that we appreciate the ‘insurance’ that the contingency planning has provided.

An up-to-date Contingency Plan

Just as a business never stands still, so to should the contingency plan be regularly reviewed and updated. Risks will change, new exposures will arise and need addressing, some actions will now be out-dated or inappropriate. A contingency plan is only effective if it is relevant to the current business.

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