Any business, irrespective of size, can only be said to be successful when it is resilient and sustainable. For a business to be sustainable, it has to ensure long-term profitability. It also needs to protect against the downsides of fluctuating markets and fortunes.

Business contingency planning is an essential strategy to ensure that businesses stay resilient for long periods. A business contingency plan involves planning and strategizing for all such possible risks.

Meaning Of Contingency Plan

At its core, a contingency plan is the most accurate way to plan for the threats and obstacles in connection with a venture. A business contingency plan involves preparing for all the possible situations that the business might encounter during its functioning.

A contingency plan is like an insurance policy—it mitigates the damage when things go wrong and cushions the organization from the impact of adverse events. Successful contingency planning involves taking into account all the possible dangers and risks that the business might run into.

Steps Of Contingency Planning Process

  1. Program Management:

Every business organization needs to appoint a management team that will be responsible for contingency planning. More often than not, this team comprises members representing various departments of the organization. It is important to ensure that all the departments or teams under the business are represented and accounted for in the contingency planning process.

Contingency plan example: One can base the contingency plan based on the probability of encountering risk. For example, the risk of earthquakes in earthquake-prone areas would always be high, so companies operating in those areas need to have a contingency plan in place for when an earthquake occurs. How will it deal with the disruption in its business? That is the question the plan needs to address.

  1. Planning:

The work of this contingency planning team involves assessing possible risks and developing realistic strategies to respond to them. Planning has to be done according to the needs of the organization. For example, if the size of the workforce is huge, one needs to plan how communication will be carried out in case of an emergency.

Contingency plan example: Plan B of business is decided as part of the contingency planning process. For instance, localities in several cities in India became “containment zones” during the pandemic.

This meant that e-commerce companies couldn’t deliver items to the doors of customers. Their contingency plans would have prepared for what needs to be done in such cases—for instance, they may have provided strict instructions to their delivery executives to drop the parcels at designated centers from where customers could come to pick up their items.

  1. Implementation:

To prevent hazards and allow for better conflict mitigation, it is necessary to figure out the chain of command in the contingency planning process. In case of a threat, who will tackle each problem?

Delegation of work is important when the meaning of a contingency plan is considered. In a situation where the contingency plan kicks in, everyone must know their precise role.

Nowadays, employees—are informed about the contingency plan after the event has occurred. To reduce roadblocks when it is time to execute, stakeholders need to be prepared beforehand. If the business contingency plan is done well, it will guide the organization through the risks encountered.

Contingency plan example: It might be worth training some of your key personnel in roles outside their core competence. This will come especially handy when employees put in their papers without any warning. The key personnel’s execution skills and knowledge can prove critical in the transition process.

  1. Testing And Reformulation:

In case of unforeseen circumstances, the existing business contingency plan is put to test. It is advisable to reformulate and reevaluate your contingency plan as the business environment changes or fluctuates. Periodic testing of plans is also essential to ensure that the plans are running smoothly and fit the solution perfectly.

Contingency plan example: For instance, it is useful for businesses to periodically carry out dry runs of their fire exit policy.

  1. Program Improvements:

After the event or threat has passed, it is important to assess and improve your contingency planning process and policy. Long-term support plans are also created for these programs. Keeping the business goals in mind, the very meaning of contingency plan involves constant problem-solving in a dynamic business and social environment.

Harappa Education offers an online course called Creating Solutions that will help you learn how to become a problem-solver by using tools and frameworks to get to the root of problems. Contingency plans can play an important role in offering a back-up option when solving problems. Now that you’ve learned the meaning of contingency planning, you’re ready to begin your workplace success journey.


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