Having a business contingency plan is important for any business. Many businesses do not consider one until it is too late because it gets overlooked. If anything in your business goes wrong, a business contingency plan can help you get through it and get things back on track again. Today we will discuss what a business contingency plan is and how to create one.
A business contingency plan documents what course of action your business needs to take in case of an emergency. This is also sometimes called a disaster plan or business continuity plan.
Types of Contingency Planning
Every business will have a different contingency plan because it depends on the type of business and the location. Some things you can plan for are natural disasters, market crashes, or financial shortfalls. It takes some time to plan but it is worth it because it could save the business if anything goes wrong.
A business contingency plan includes:
- Potential risk scenarios
- Evaluation of the likelihood of the scenario
- The potential impact if it happens
- The steps that need to be taken to avoid or lessen the problem
- The response that should be taken in case it happens
The following are examples of what a business contingency plan can be used for:
- Financial emergencies
- Staffing emergencies
- Equipment disasters
- Technical disruptions
- Security disasters
- Natural disasters (pandemics, hurricanes, earthquakes, etc.)
- Man-made disasters (terror attacks)
- Legal disputes
How To Create a Business Contingency Plan
It takes some time and research to create a contingency plan for your business. Here are some of the fundamentals needed.
Identify Your Resources
Do some research and figure out what resources you need to prioritize that your business cannot live without including employees, facilities, assets, and more.
Pinpoint the Key Risks
Next you need to identify the potential threats to those resources.
Draft Your Plans
The next step is to write out a contingency plan for the key risks you identified. Start with the highest threats because these will have the biggest impact. Then work your way down your list to the lower threats.
Distribute the Plans
After the plan is finalized and approved, make sure that your employees and stakeholders can access it easily. You can use an app that will help provide the plan to your employees on their phone and you can also have a hard-copy as well so that they can have the access to it immediately in case the event does occur.
Test the Plans
Next you will want to make sure that your contingency plan will actually work so you can run a test to see if it is successful. Testing is a great opportunity to train your employees or key people who will be responsible in the event that something does arise.
Update the Plans If Needed
Keep the plans updated as your business goes through any changes. Make sure it stays up-to-date and schedule a time to review either annually, quarterly, or even a monthly basis. You can also make updates after you have used it when that happens and make any adjustments if needed.
The Bottom Line
It is important for every business to plan for unexpected events and emergencies. Follow the steps above to create your business contingency plan so you are prepared and can protect your company.