Essential Steps to Contingency Planning for Business Continuity

COVID-19 opened our eyes to unforeseen risks a business is vulnerable to and the importance of Contingency Planning. A pandemic isn’t something one expects to happen in one’s lifetime, yet it did, even in the heart of capitalism. As Fortune US reported, it shuttered nearly 100,000 businesses by Sept 2020. Events such as natural calamities, labor trouble, cash flow crunch, accidents, and data breaches are beyond your control, but they could lead to serious disruptions. Continuity is the lifeblood of any business.

So what happens when this continuity, or the lack of a Business Continuity Strategy, is threatened by such forces?

The typical reaction is to jump into a Crisis Management Strategy; however, this is a post facto reaction.

On the other hand, Contingency Planning, as a preventive control, could mitigate financial or reputational damage. These plans are a must for business owners as they act like a Plan B to minimize damage. It takes only a little effort to put in place, but the payback is immense.

Of course, such plans don’t always have to be made for negative experiences; they could also be created for positive situations like sudden scaling of demand.

The very first step in Contingency Planning Steps is to know and prioritize your current resources.

You should have a list of people, processes, and functions that you cannot do without. You then need to map the possible risks that these critical aspects of your business could face. Map as many scenarios as you can so that Contingency Planning can be a comprehensive go-to guide. Each scenario will need a plan B attached to it, with an eye on Risk Mitigation Strategy. The final step is effectively communicating the plan to your employees.

In the current scenario, companies that have moved to a WFH model for the foreseeable future are an example of workforce contingency planning. A service business that does not allow one client monopoly is an example of a Crisis Management Strategy in case of key client failure. A manufacturing unit that can ramp up capacity overnight is an example of a demand Contingency Planning model. We pray that such plans are not needed, but in case they are, you should be able to pull them out and ensure that the show goes on as it must.