Contingencies are those scenarios that occur outside the regular scheme of things, and are likely to affect a business’ ability to operate efficiently. They can be in the form of prolonged power blackouts, medical emergencies, the resignation of key personnel or sudden revenue drops, and so on. A perfect example of a contingency would be the situation created by the spread of the novel coronavirus. The occurrence of these events is beyond the control of the organisation. Therefore, anticipating these disruptions and preparing for them is critical in ensuring that your business strategy has a wide enough scope, which is imperative for its survival. In this light, contingency planning is an activity undertaken to prepare for such events to ensure minimal disruption to a company’s day-to-day operations, sustain relationships with their clients, and maintain the morale of employees. 

The Need For Contingency Planning

Ensuring that you have a contingency plan is a significant part of organisational governance. It is what is usually referred to as ‘The Plan B’, and is an integral component to consider given the fact that risks which can affect the workflow of any project are bound to occur. Here are a few other points that highlight the need for a contingency plan,

• Lessens panic and streamlines damage control: Following a crisis, the most common response is to panic. However, a comprehensive plan enables people to react faster, take responsibility, mobilise and speed up recovery operations in order to mitigate damage. Rather than wait and allow the chaos to unfold, contingency planning allows your team to be proactive and streamline damage control, so that order is restored promptly. 
• Allows for more flexibility: Having a contingency plan gives you the confidence to make changes in order to improve the efficiency of your workforce. The safety net provided by contingency planning allows you to be more flexible, in order to keep up with the changing needs of the market. 
• Enhances your company’s reputation and credibility: Knowing that you have formal mechanisms in place, to respond to any adverse scenario is always a reassuring fact for your clients, and increases the level of trust they have in your ability to execute things effectively. This is extremely important when it comes to sustaining present relationships, and solidifying the establishment of new ones. 
• Enables you to procure insurance more efficiently: As a large part of contingency planning deals with risk management, it can also ease your burden when it comes to insurance. Since you will already have mechanisms in place to minimise the cost of damages and have an idea about which contingencies may affect you adversely, you can be more specific when it comes to procuring insurance. By streamlining your insurance needs, and avoiding broad coverage, you can save a significant amount of money when it comes to spending on premiums. 

Developing A Contingency Plan

While every organisation will have to consider things from their unique perspective, the basic processes involved in developing a contingency plan can be generalised.

1. Organise your resources: The first thing you need to do is audit your company and list out all its crucial resources; this includes key personnel, essential teams, tools, facilities, etc. Once you have made a comprehensive list of all your critical resources, you should prioritise them according to the significance they bear, in the maintenance of the smooth functioning of your organisation. This will help you identify where your strengths and weaknesses are as a company. 
2. Identify all key risks posed: Next, locate all the areas where your company is most vulnerable; this can be done by meeting with personnel in various departments, so as to get a full understanding of what events could compromise your resources and operations; hire an external consultant, if needed.
3. Devise solutions for the identified risks: For all the risks posed, devise solutions that attempt to resume normal operation of the company, by thinking about what necessary actions and communications have to be made, the various individual and collective responsibilities for employees, specific timelines to enact particular facets of the plan, and so on.
4. Revisit and revise your plan over time: Last but not least, you should decide on a framework to revisit your contingency plan and assess if improvements need to be made. Ensure that you periodically revise your contingency plan to factor in the evolving needs of the market and the changes that take place within your organisation. 

Things like a lack of working capital, breakdown of machinery, failures in management, natural disasters, and several other unforeseeable deterrents can cause your business to come to a halt. Having a well thought out contingency plan can be a determining factor in helping you overcome these crises without having to shut down your business. So, if you haven’t worked on your contingency plan yet or you’ve put off revising your existing plan in a while, don’t wait any longer – the sooner you get proactive the better!