Contingency planning

Preparing for the unexpected.

Good business management means planning for when things go wrong, as well as when things go right. Disasters and serious incidents such as flooding, fire, or the death of a key employee are relatively rare, but they do happen. By identifying possible risks to your business and using them to make a contingency plan, you can ensure your business continues to survive, and thrive, after a crisis.

 Key risks to your business

There are three types of risk to identify as you make your contingency plans:

  1. A major disaster that immediately prevents normal business.
  2. A gradually worsening situation that makes it difficult to operate normally.
  3. A series of smaller events happening simultaneously.

Risks to consider include:

  • Physical problems – things that might physically damage your property such as fire or flooding.
  • Equipment failure – any machinery which is essential to your operation including computers and delivery vehicles.
  • Product failure – if your products cause injury or have to be recalled.
  • External issues – such as a transport strike preventing you from getting a delivery to a key client.
  • Supplier problems – difficulties involving your major suppliers are likely to adversely affect your business too.
  • Staff problems – including the death or serious illness of a key employee.
  • Public relations – negative feedback about your company, including on social media sites.
  • Radical changes in the business environment – such as a highly aggressive competitor moving into your area.
  • Legal threats – from liability claims to copyright issues.

 Drawing up your contingency plan

  • Make a list of all the possible risks to your business, however unlikely.
  • For each of your risks make a note of how likely that risk will may occur and the impact it will have it if did occur.
  • Decide who/what will be affected in each eventuality and how.
  • Make a list all the people and organisations that you will need to contact in the event of a serious incident with their contact details, e.g. your staff, your customers, your bank, your insurers and your suppliers, as well as details of plumbers, electricians etc.
  • Identify which risks are insurable and check that you have adequate cover. As well as protection against fire, flood and theft you can also insure against the death or illness of a key person in your business or the legal costs of protecting your intellectual property. Insurance companies may reduce your premium if you have a contingency plan in place.
  • Minimise the impact of serious incidents as far as possible. Make sure that you have adequate emergency call-out arrangements covering your essential equipment, for example.

 What else to include

Your contingency plan should cover several stages:

  • What will happen immediately after a serious incident.
  • How your business will continue.
  • How it will get back to full strength.

Set out the order in which business functions will be resumed and who will be responsible for doing what.

You may need to make specific recovery plans to cover different risks, such as for disruptions to IT and telephony.

Consider nominating someone as a spokesperson, or have details of an industry PR company to hand, in case your business is caught up in an incident that is newsworthy.

Testing your plans

Once you’ve put your plan together, make sure your managers and staff are familiar with it and they understand what their roles will be. Test your plans as much as possible and gather feedback, then use the lessons learned to improve them.

Keeping your plans safe

Copies of your plans should be stored away from the workplace to keep them safe. Make sure that plans are kept up to date – note any new risks and keep contact details updated.

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