What are the seven 7 steps of a contingency plan?

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.

Template 1

Template 2

Template 3

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.

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In an organization, a contingency plan is considered to be the plan- B as it is kept for the time when the circumstances arise in which required changes are needed. It is actually designed as a boon for the organization at the time of help. It is made as a security for the unknown future events so that when such situations arise then there is no panic around and everything can be handled easily.

• Contingency Plans for Project Management
• Benefits of Contingency Planning

It is extremely mandatory for a company to develop such plans. Here are seven important steps which will help you make a perfect contingency plan.

1. Make the Required Statement of the Planning Policy

In accordance with the planning policy of the organization; this planning policy statement is made in which all the details are mentioned in relation to the authorities that will give effective guidelines. Following this step with perfection is extremely necessary.

In the company, there are varied things which require priorities. In this step, you need to set up the factors in relation to the priorities for the aspects to be handled according to the aim of the company. Business impact analysis will always help you out in numerous ways. 

3. Preventive Control Measure

All the preventive control measures are to be prepared in this step with proper and latest information. It is an extremely important step to be handled. Here you need to reduce the things which are causing harm to the organization and tackle it correctly by required necessary methods. Prevention is always more effective the cure so this is very necessary to be followed in such a way that the company would not get harmed at all.

4. Make the Strategies of Contingency Planning

At the time of hurdles; it is very important to tackle them and recover quickly. The recovery time should always be effective and not at all long otherwise the company will face many difficulties. Hence, the strategies should be extremely effective.

5. Efficient Information System

The information system should be prepared with extreme care and all the necessary guidelines and detailed information should be contained in it.  An information system will only be considered as effective when it has all the required necessities of the organization mentioned in it with latest requirements as well.

6. Regular Tests, Training, as well as Required Exercises, Should be Done

The effective validation of tests and the training to be performed should always be in accordance with the prevailed requirements of the situation of the organization. This should be done on a regular basis so that the required improvements can be made. This will help the organization a lot. There are numerous methods as well as different ways to do it and all should be followed in accordance with the respective situations.

7. The Effective Maintenance of the Flexible Plan

The plan should be such which is always updated with the changing environmental conditions. It is extremely important for this step to be in accordance with the latest changes in the daily procedures. The plan should be made in such a way that it is flexible enough to adapt the required changes in it. 

These days the market conditions change very often so it is very mandatory to make a plan as flexible as you can. This will surely prove as an extreme boon at the difficult situations.

Following these seven important steps will improve the working of the company. These steps should always stay updated as well. Everything mentioned here will provide you a better way of making the contingency plan of your company.