Contingency plan examples: A step-by-step guide to help your business prepare for the unexpected


Jul 10, 2023

Enterprises are sometimes outlined by how they cope with occasions which are out of their management. For instance, the way you react to a disruptive know-how or address a sudden change within the markets may be the distinction between success and failure.

Contingency planning is the artwork of making ready for the surprising. However the place do you begin and the way do you separate the threats that would do actual hurt to your small business from those that aren’t as crucial?

Listed here are some essential definitions, finest practices and robust examples that will help you construct contingency plans for no matter your small business faces.

What’s a contingency plan?

Enterprise contingency plans, often known as “enterprise continuity plans” or “emergency response plans” are motion plans to assist organizations resume regular enterprise operations after an unintended interruption. Organizations construct contingency plans to assist them face quite a lot of threats, together with pure disasters, mergers of rival firms, knowledge loss, community breaches and sudden shifts in buyer demand.

A superb place to start out is with a sequence of “what if” questions that suggest varied worst-case eventualities you’ll must have a plan for. For instance:

  • What if a fireplace broke out within the warehouse the place you retain confidential buyer information?
  • What if your prime three engineers all give up on the identical time?
  • What if the nation the place your microprocessors are constructed was immediately invaded?
Good contingency plans prioritize the dangers a corporation faces, delegate accountability to members of the response groups and enhance the probability that the corporate will make a full restoration after a unfavorable occasion.

5 steps to construct a robust contingency plan

1. Make a listing of dangers and prioritize them in line with probability and severity.

Within the first stage of the contingency planning course of, stakeholders brainstorm a listing of potential dangers the corporate faces and conduct danger evaluation on each. Workforce members focus on potential dangers, analyze the chance influence of every one and suggest programs of motion to extend their total preparedness. You don’t must create a danger administration plan for each menace your organization faces, simply those your decision-makers assess as each extremely possible and with a possible influence on regular enterprise processes.

2. Create a enterprise influence evaluation (BIA) report

Enterprise influence evaluation (BIA) is an important step in understanding how the totally different enterprise features of an enterprise will reply to surprising occasions. A technique to do that is to take a look at how a lot firm income is being generated by the enterprise unit in danger. If the BIA signifies that it’s a excessive proportion, the corporate will almost definitely need to prioritize making a contingency plan for this enterprise danger.

3. Make a plan

For every potential menace your organization faces that has each a excessive probability of occurring and a excessive potential influence on enterprise operations, you may observe these three easy steps to create a plan:

  • Determine triggers that can set a plan into motion: For instance, if a hurricane is approaching, when does the storm set off your plan of action? When it’s 50 miles away? 100 miles? Your groups will want clear steering so they’ll know when to start out executing the actions they’ve been assigned.
  • Design an applicable response: The menace your group ready for has arrived and groups are springing into motion. Everybody concerned will want clear, accessible directions, protocols which are straightforward to observe and a approach to talk with different stakeholders.
  • Delegate accountability clearly and pretty: Like every other initiative, contingency planning requires efficient challenge administration to succeed. One confirmed approach to handle that is to create a RACI chart. RACI stands for accountable, accountable, consulted and knowledgeable, and it’s extensively utilized in disaster administration to assist groups and people delegate accountability and react to crises in actual time.
4. Get buy-in from your entire group—and be lifelike about price

Generally it may be exhausting to justify the significance of placing assets into making ready for one thing which may by no means occur. But when the occasions of those previous few years have taught us something, it’s that having sturdy contingency plans is invaluable.

Consider the availability chain issues and important shortages wreaked by the pandemic or the chaos to world provide chains caused by Russia’s invasion of Ukraine. In relation to convincing enterprise leaders of the worth of getting a robust Plan B in place, it’s essential to take a look at the massive image—not simply the price of the plan however the potential prices incurred if no plan is put in place.

5. Take a look at and reassess your plans frequently

Markets and industries are always shifting, so the truth {that a} contingency plan faces when it’s triggered is perhaps very totally different than the one it was created for. Plans ought to be examined no less than as soon as yearly, and new danger assessments carried out.

Contingency plan examples

Listed here are some mannequin eventualities that display how totally different sorts of companies would put together to face dangers. The three-step course of outlined right here can be utilized to create contingency plans templates for no matter threats your group faces.

A community supplier going through an enormous outage

What in case your core enterprise was so crucial to your prospects that downtime of even only a few hours might lead to tens of millions of {dollars} in misplaced income? Many web and mobile networks face this problem yearly. Right here’s an instance of a contingency plan that will assist them put together to face this drawback:

  1. Assess the severity and probability of the chance: A latest examine by Open Gear confirmed that solely 9% of world organizations keep away from community outages in a mean quarter. Coupled with what is understood about these assaults—that they will trigger tens of millions of {dollars} in injury and take an immeasurable toll on enterprise status—this danger must be thought-about each extremely possible and extremely extreme by way of the potential injury it might do to the corporate.
  2. Determine the set off that can set your plan in motion: On this instance, what indicators ought to decision-makers have watched for to know when a possible outage was starting? These would possibly embody safety breaches, looming pure disasters or every other occasion that has preceded outages prior to now.
  3. Create the best response: The group’s leaders will need to decide an inexpensive restoration time goal (RTO) and restoration level goal (RPO) for every service and knowledge class their firm faces. RTO is often measured with a easy time metric, similar to days, hours or minutes. RPO is a little more sophisticated because it entails figuring out the minimal/most age of information that may be recovered rapidly from backup techniques with the intention to restore the community to regular operations.
A meals distribution firm dealing with an surprising scarcity

In case your core enterprise has advanced provide chains that run by means of totally different areas and international locations, monitoring geopolitical circumstances in these locations might be crucial to sustaining the well being of your small business operations. On this instance, we’ll take a look at a meals distributor making ready to face a scarcity of a much-needed ingredient resulting from volatility in a area that’s crucial to its provide chain:

  1. Assess the severity and probability of the chance: The corporate’s leaders have been following the information within the area the place they supply the ingredient and are involved about the potential for political unrest. Since they want this ingredient to make one in all their best-selling merchandise, each the probability and potential severity of this danger are rated as excessive.
  2. Determine the set off that can set your plan in motion: Warfare breaks out within the area, shutting down all ports of entry/exit and severely limiting transport inside the nation through air, roads and railroads. Transportation of their ingredient might be inconceivable till stability returns to the area.
  3. Create the best response: The corporate’s enterprise leaders create a two-pronged contingency plan to assist them face this drawback. First, they proactively seek for alternate suppliers of this ingredient in areas that aren’t so vulnerable to volatility. These suppliers might price extra and take time to change to, however when the general price of a normal manufacturing disruption that will come about within the occasion of struggle is factored in, the associated fee is value it. Second, they search for an alternative choice to this ingredient that they will use of their product.
A social community experiencing a buyer knowledge breach

The managers of a big social community know of a cybersecurity danger of their app that they’re working to repair. Within the occasion that they’re hacked earlier than they repair it, they’re prone to lose confidential buyer knowledge:

  1. Assess the severity and probability of danger: They fee the probability of this occasion as excessive, since, as a social community, they’re a frequent goal of assaults. Additionally they fee the potential severity of harm to the corporate as excessive since any lack of confidential buyer knowledge will expose them to lawsuits.
  2. Determine the set off that can set your plan in motion: Engineers make the social community’s management conscious that an assault has been detected and that their buyer’s confidential info has been compromised.
  3. Create the best response: The community contracts with a particular response group to return to their support within the occasion of an assault and assist them safe their info techniques and restore app performance. Additionally they change their IT infrastructure to make buyer knowledge safer. Lastly, they work with a good PR agency to organize a plan for outreach and messaging to reassure prospects within the occasion that their private info is compromised.
The worth of contingency planning

When enterprise operations are disrupted by a unfavorable occasion, good contingency planning offers a corporation’s response construction and self-discipline. Throughout a disaster, decision-makers and workers usually really feel overwhelmed by the pile-up of occasions past their management, and having a radical backup plan helps reestablish confidence and return operations to regular.

Listed here are a couple of advantages organizations can anticipate from sturdy contingency plans:

  • Improved restoration instances: Companies with good plans in place recuperate quicker from a disruptive occasion than firms that haven’t ready.
  • Lowered prices—monetary and reputational: Good contingency plans decrease each monetary and reputational injury to an organization. For instance, whereas a knowledge breach at a social community that compromises buyer info might lead to lawsuits, it might additionally trigger long-term injury if prospects determine to depart the community as a result of they now not belief the corporate to maintain their private info secure.
  • Larger confidence and morale: Many organizations use contingency plans to indicate workers, shareholders and prospects that they’ve thought by means of each potential eventuality which may befall their firm, giving them confidence that the corporate has their pursuits in thoughts.
Contingency plan options

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Study extra about IBM Maximo Software Suite

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