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  • Writer's picturePrincipal Consultant

Contingency Planning

You’re working  along in your business, and suddenly — out of the blue — the unexpected happens. It could be in the form of a natural disaster, or something else, like a medical emergency an employee. You could lose your entire data system to a tech glitch, or sales of your new product could flat-line.

Any of these events could prevent a business from functioning, and that’s where contingency planning can save the day.  Here is a four-step process you can use to prepare a contingency plan for your business.

Step 1: Risk Analysis

Identify which potential areas in your business could possibly cause problems. To do this, many business leaders brainstorm with their employees, looking at all areas of operation and identifying the things that could go wrong. 

  • Purchasing: What if your key supplier goes out of business? What if you lose your credit account with one of your major suppliers?

  • Accounting: How would you issue payment if your accounts suddenly leaves or call in sick? What if an approver doesn’t show up for work for a day — or longer?

  • Sales: What if your top producing salesperson takes a job with your competition? What if one of your employees commits a social media gaffe and people in your community began boycotting your business?

  • Natural disasters: What if the power in your area goes out and you lose access to your data, including customer information and receipts? What if a flood,  hurricane, or other natural disaster hits?

In addition to brainstorming, It helps to have an external influence present, such as your accountant or business consultant, to question scenarios and provide some suggestions, often potential risks aren’t always obvious, particularly to those that are closest to the task.

Step 2: Prioritise the Risks

Now that you have a list of many possible scenarios, it’s time to identify those that pose the biggest negative impact to your business. First give each risk a probability ranking of 1 to 10, and then rank it in terms of the possible impact on your business. 

Step 3: Create a Contingency Plan

Once you’ve identified the scenarios that are most likely to disrupt your business operations, you’ll need to create a contingency plan for each. If your goal is to decide what you will do to   in case one of the disruptive scenarios takes place, you’ll need to outline a step-by-step plan for each one. Some of the key points you’ll want to consider are:

  • Timelines: When creating contingency plans, be sure to look at them from a timeline perspective. What will you need to do in the first hour after a data loss? What about the first day? The first week?

  • Communications: Decide in advance who will be in charge of communicating with everyone else for each scenario. 

  • Staff needs: Talk to each of your departments or employees and have them list exactly what they’ll need to continue operating if a given scenario occurs. Then make the necessary arrangements to provide it.

  • Reduce the risk: For example, for natural disasters, you can reduce the risk by making sure you have adequate insurance coverage. To reduce the risk of a data loss, you can store yours securely in the cloud.

Because each risk calls for a unique contingency plan, you’ll have to devise one for each.  

Step 4: Maintain  & Review the Plan

Now that you’ve created contingency plans for each of your risk areas, you’ll need to ensure that they’re updated and handy if you need them. Business owners should consider reviewing the plans monthly and quarterly. In addition to keeping them updated, here are some other tips to ensure that your plan will be of help should an unexpected situation arise:

  • Don’t store the plan only in digital form. If the power goes out or you lose your data, you won’t be able to access it. Keep a copy in paper format, as well.

  • Store a copy of it onsite and offsite in case something prevents you from going to the business.

  • Make sure that all employees are aware of the plan, and can access it.

  • Ensure that everyone knows their role in the plan and has the training to do their job.

When the plans have been created.. road test them, do they meet the needs of the business? Are they a success, what are the failures,  if there are failures evaluate, and rectify them, Perfect them. Be adaptive, Learn what does not work and learn with is critical to your success


business owners to ignore the risks. By creating a good contingency plan, you’ll be prepared.

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