Contingency planning includes natural disasters and major crises like flood, fire and tornadoes. It also includes problems like business relationships, customers, employees and loss of data’s. It is also considered as a set of actions which helps the organization to respond to the futuristic situations to execute a primary plan to succeed. A contingency plan is a series of actions you may take to help you respond effectively to a severe disaster that may or may not occur. Preventative measures and recovery procedures should be included, and it should be examined and updated on a regular basis. The key to developing a flexible and successful contingency plan for any firm is to draft and evaluate it as a team with all levels of management. To guarantee that the prepared contingency plan is not only effective but also full, it is vital to operate as a team. Contingency planning aids not only in the company’s preparation for unanticipated calamities, but also in the identification of vulnerabilities and the filling of such gaps. As a result, here are five crucial factors to think about while putting together a realistic, participative, and thorough organizational contingency plan.
1. Make a strategy for each circumstance.
Scenario planning is an important part of contingency planning because it helps a corporation to assess, evaluate, and prioritize future risks in a variety of scenarios. Developing scenarios as a team will identify the scale of the collective team reaction and resource requirements, ensuring that the most pressing problems are addressed and realistic plans are devised. It assists us in anticipating the kind of risks or disasters we may face, as well as preparing appropriate response methods in the case they materialize.
2. Make a manual of information.
The second need is to ensure that each risk scenario has an up-to-date operational information handbook. This handbook will be the go-to resource for all team members’ roles and responsibilities during an emergency, as well as the necessary reaction, decision, and information dissemination procedures. It will be a comprehensive statement that sets the tone for the company’s recovery and response actions while also assuring operational excellence and accountability.
3. Recovery Preparation
In terms of creating business communication, avoiding financial risks, and generating suitable reaction tactics, a thorough contingency planning exercise includes all aspects. Furthermore, business recovery planning is an essential component of contingency planning since it lays out the step-by-step procedures for restoring and maintaining all critical corporate activities. The recovery component of the plan will always be fluid since part of the recovery procedures will have to be determined and implemented in real time during the contingency.
4. Examining Under Stress
As part of your contingency planning process, conduct stress tests to help you and your team uncover any gaps in the plan while also ensuring proper training. We feel it is an important part of contingency planning because it provides clarity and instills catastrophe preparation in both management and staff, leading to team collaboration, which is crucial to any company’s continuous operations and survival.
5. Conduct a regular audit
Because any human, technical, or operational changes inside the organization may render the plan worthless and incompetent, it’s just as important to update and analyze the contingency plan on a regular basis as it is to construct one in the first place.
Nature of events
In contingency planning there are several types of events like;
- Contingency budget.
- Physical Event.
- Legal Event.
Risk Identification and Risk Assessment Risk Events Identification:
Natural Events Disasters: Flood, Landslides, Earthquakes, Climatic changes and Tornadoes.
Human Resources: Conflict, workforce, labor and crowd.
Legal: Disputes in between two parties and unexpected changes in laws.
Health and Safety Precautions: Entrance to unauthorized areas, causing harmly disease, and food poisoning.
Technology and Technical Events: connectivity or network problems, electricity breakdowns, electricity fluctuation and machinery failure(Diane,2019).
● Risk Assessment
The determination of impact on uncertain events is known as risk assessment. Risk assessment is an identifying or safeguard with a sensible course of action to control or prevent the risks that occur in the workplace.
- Response Strategies: Risk response strategy is the process of planning and
making decisions to decide what or how to control or deal with the risks. The response strategy helps to link with the situations with the plans.
➔ Impact Of Changes To Plans:
Sometimes the organization has to change their plans to restructure their business and also to improve competitive advantage. They may also have to change their plans due to some unexpected change in technologies and due to improper availability of resources. The change in the implemented plan reduces the life cycle of the product so to balance the portfolio of products the organization needs to invest more in research and development.
➔ Need For Contingency Plans of Hotwell Group
- Hotwell has to manage the damages that come on the products. It became a big backlash for Hotwell. Hotwell has already taken further forward steps to solve the defects that come in change of taste.
- Hotwell is facing issues on exporting products from Switzerland. So the company came with a contingency plan to produce products in different countries.
➔ Tips to develop contingency plan
- Analyze or determine how each situation like flood or fire affects the operations.
- Collect each and every datas needed for each step.
- Develop plans considering the organization as a whole and do instant tests according to that.
- Implementation of education and communication plans to make employees get well informed changes and changes roles and regulations .