Unnatural and natural disasters like fires, typhoons, and earthquakes are unwanted events and, at the same time, unpredictable. They have an impact on every individual, group, and organization’s businesses or projects. Since such events are unforeseeable, all that we can do is prepare for what is to come. This is one of the many reasons why a course of action for the prevention or mitigation of the damages of the aforementioned emergency situations came to existence. And, we all know it by the name of a risk management plan. The latter has an aspect called a contingency plan, which covers a particular organization’s stratagem on recovery after being hit by a catastrophe or two. Learn more about the process document by flicking through our Free 14+ Contingency Plan Examples in PDF, Microsoft Word, Google Docs, and Apple Pages file formats.
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A contingency plan is a scheme that highlights the activities of an organization in response to catastrophic events that caused, is causing, or will be causing damage to its operations. The Great Game of Business® defined the tactic as short and long-term protection of a company, whether a big or small business. Furthermore, they affirmed that it assists the job risk assessment of companies in unveiling deficiencies, so they can be immediately discussed if things don’t go their way. Overall, the plan is an effective tool that thoroughly prepares corporate entities for disadvantageous positioning brought by any unwanted circumstance.
There are many reasons as to why businesses should have a contingency plan. To sum them up, it has something to do with preparation, versatility, responsiveness, composure, decision-making, and mitigation. Get some insights through the following sample situations:
1. Preparation – A fire broke out in your office, and most of your data inventory was destroyed. But with your contingency plan’s consideration of data backup, you have saved all or most of your important documentation in the cloud.
2. Versatility – The government made some changes in its privacy and safety policy, documentation policy, monetary policy, corporate travel policy, and others, affecting the operations of your business. Through contingency plans, adjusting to the changes will not be as stressful as many businesses will be experiencing.
3. Responsiveness – The fire that broke out in your office was a big problem. However, your contingency plan has ready-made relocation sites or work options to continue operations, making the impact less severe on your operations management plan.
4. Composure – Unprepared people often panic because they don’t know what to do in emergency situations. Knowing that your company has a contingency plan, your employees will surely stick to the emergency action plan that comes with it.
5. Decision-Making – Impromptu decisions can lead to negative results. In case you don’t know, creating decision criteria and decision tree analysis is a thing. And, they take days, weeks, or a month to complete. With contingency plans, you no longer have to experience the consequences of impromptu decisions because decisions are already made in advance.
6. Mitigation – Business problems take many forms, and each form corresponds to a loss of figures in the asset inventory. By putting your contingency plan to work, you minimize the losses that may take place. This may be about the monetary aspect, like profit and loss budget, or others.
Contingency plans have a lot of areas that need to be taken into consideration. If you check out the internet for those areas, you will be overwhelmed by the number of search results that you will be getting. However, not all of them are applicable to your company. And so, processes like a business needs assessment surveys and more must be conducted for you to complete a contingency plan. Below, we provided you a complete guide that helps you organize one. Here’s how.
Resources are much-needed to sustain a business. They act as a flexible foundation of an organization where if one component is missing, others will be filling it up to keep the sustainability balanced. Preparing a complete list of the resources will make it easier for you to know what your company has and lacks to prevent risks from taking place.
After knowing the available resources your company has, the next step is to identify which operations or business development strategies will be affected. Most likely, all of them.
When starting to compose your plan, you have to make sure that it follows the standard document flow. By making sure that your plan complies with the required qualities, you heighten your chances of making a set of effective workplace safety rules.
Once you have your draft ready, present them to the company stakeholders. Doing so allows you to gather useful insights that will make your presentation even better.
To polish your plan’s draft, you have to put into account the recommendations pitched by the stakeholders. At the same time, you have to free your document from grammatical and spelling errors. Executing your project implementation plan and maintenance strategy plan should follow.
The main difference between a contingency plan and a continuity plan is that the former is proactive, and the latter is reactive. In other words, a contingency plan approaches problems even before they take place while a continuity plan is developed after the problems took place.
The key components of a contingency plan include the possible situations, precipitants, response, stakeholders, responsibilities, and timeframe.
Contingency planning is part of risk management. Such types of control are governed by managers. The more managers who will take part in the planning, the more effective and successful it will become.
If you base your understanding of contingency plans on the facts and details above, you may conclude that it only covers natural disasters. But, it has been made clear at the very start of the article that unnatural risks are also part of the package. Plus, they are not only used to respond to risks but also used to prevent those risks. Whichever reason a contingency plan fits in your company situations, it is evident that it comes with many benefits.