More information on business contingency plan

In business there are situations that have great effect in the direct operations and therefore sustainability of the business. The manner and time the business takes to respond to such situations can lead to loss of major clients, employees and sometimes even to closure of business. Such situations call for business contingency planning. A business contingency plan is the step by step approach through which a business can recover from an event that has great impact on the business. This event may either be positive or negative.

More information on business contingency plan


Importance

The availability of a contingency plan enables businesses to respond faster to impactful events and therefore minimise the effect that such events would have on the business operations. This may save the business a lot of money, resources and ensures that the correct decisions are made during an emergency situation. In addition, the development of the plan calls for the anticipation of major and impactful risks that have a high likelihood of occurrence. Besides developing the plan, the business can take out insurance covers to cater for such situations and therefore cushion the business and its resources.


Developing the plan

The development of the plan is a joint function between the risk mitigation department and the strategic management. The first step is to identify all the risks that the business faces. At this stage, the business should list all possible risks without necessarily splitting hairs on their importance or likelihood. The team involved is then tasked with rating all the risks listed on a given scale. This scale can be a percentage, a numerical rank say between 0 and 10 and so on. However, it is essential for the rate to be in numerical figures for future computations.


After the risks have all been ranked, the team should then rate the probability of occurrence of the same risks using the same scale that was used to rank them. If a percentage was used, then the likelihood should also be in percentage. Next the team should then multiply the rank with the likelihood of occurrence and all the risks ranked in descending order based on the result. The team should then set a threshold or minimum value beyond which a general contingency plan can be developed.


For the top ranking risks, a step by step approach that should be followed in case of occurrence should be drafted. This process should be done strategically and carefully since it has a great effect on the continuity of business in the future. The team responsible should ensure they think about all possible actions are the results in order to choose the most viable. Once the plan has been finished, copies can be made and stored in secure places. The plan can be improved as technology and other forms of advancement bring forth better and faster ways to respond to certain things. in addition, the business may contract a contingency planning consultant to assist during the process. they will not only bring in expertise and experience but they can also criticise the plan from a third party's point of view.


After development

After the development process is over, the team should then carry out intensive awareness education among different teams. Why? The team involved in drafting the plan may not be necessarily the team that will implement it. People move from one organisation to another over time while others retire or die. Were the plan to be kept a secret, then the business would still suffer if a contingency occurred.