From supply chain issues to mass power outages to natural disasters, there are countless disruptions that can throw business and government operations off course. Having a contingency plan in place is a must to avoid long-lasting damage to your organization.

What is contingency planning?

Contingency planning is the strategic approach of preparing for unexpected events that have the potential to impact your organization. These plans are specifically designed to identify risks and develop actionable responses when the outcome deviates from the norm.

What is a contingency plan?

A contingency plan is the detailed description of what to do when a disruptive event occurs. A business’s contingency plan will keep critical functions and services operating with minimal interruption. These types of plans are designed to address specific risks and are often tailored to your organization's unique needs.

3 elements of a well-constructed contingency plan:

  1. Preventive: The plan is created in advance based on possible “what if” scenarios

  2. Preparedness:Individuals and departments know exactly what roles they play within the plan

  3. Recovery:Includes a detailed process for what to do when returning to normal operations

Why do you need a contingency plan for your business?

If your organization does not have the proper plans in place, the impact of an unexpected event can be vast. Business contingency plans help address a situation when it happens. When your team, clients and stakeholders know that adequate measures and processes have been implemented, they can find peace of mind knowing that there are clear guidelines to follow in times of disruption.

Business contingency plans also help prevent major financial damage. If an organization is unable to deliver the products and services it offers during an incident, its finances are likely to be impacted. Providing a roadmap to recovery helps a company maintain cash flow, reduce unexpected costs and avoid legal penalties.

Being able to recover quickly gives you a competitive edge. While your team may initially struggle to address the situation, following your contingency plan will assist them in getting operations back to normal.

What is disaster recovery?

Disaster recovery includes the methods, practices and processes an organization employs to resume essential operations after a major disruption. It is often considered a subset of business continuity planning and can be customized by consultants to suit organizations across industries.

Contingency planning vs. disaster recovery

While disaster recovery and contingency planning are often discussed together, they serve very different roles within your business continuity strategy. A business contingency plan dictates exactly what needs to be done during the immediate response to a disruption, while disaster recovery is designed to help you get back to normal operations after the event.

How to choose the right contingency plan for your business

Business continuity is an all-encompassing term for emergency management—but that doesn’t mean every type of plan should be treated equally. There are a few key differences to consider when choosing the best one for your organization. Plans to consider include:

Disaster recovery plan (DRP)

DRPs are primarily focused on restoring IT systems, online applications and critical data post-disaster. These crisis management plans are specifically focused on renewing the IT infrastructure and data recovery after a disruption.

Business continuity plan (BCP)

BCPs are designed to keep all essential functions operational during a crisis. It offers a broader scope, focusing on all the departments and assets within the company, including people, processes, facilities and supply chains.

Business continuity and disaster recovery (BCDR)

These days, more companies develop a joint, comprehensive plan, deemed BCDR. If your organization is dependent on data stored on modernized IT systems, is located in a high-risk area or has no formal recovery process, this may be the strategy for you.

Examples of contingency plans in different industries

When a disruption occurs, whether it is a natural disaster or man-made failure, it’s important to be prepared. Here are a few examples of how integrating crisis recovery plays out in various industries.

Healthcare business contingency plan

Whether it’s a companywide strike or a medical emergency, staffing shortages are a frequent disruption in the healthcare industry. Implementing a disaster recovery plan will ensure patient safety and enable hospitals to maintain critical care levels, often by utilizing temporary staff or sending patients to other facilities.

Banking business contingency plan

In the world of banking, disaster recovery plans can involve restoring critical operations after disruptions, focusing on risk assessment, detailing IT system recovery, establishing emergency communication protocols, outlining personnel roles and mandating regular testing to ensure business continuity and regulatory compliance, protecting data and maintaining customer trust. At its core, a banking business contingency plan outlines how a financial institution should prepare to stay operational during a crisis.

Manufacturing business contingency plan

A manufacturing company is reliant on its supply chain. When critical parts or suppliers are affected by a disaster, a contingency plan ensures fewer disruptions. These plans can include dual sourcing parts, a backup maintenance team, backup power sources and more.

The 5 steps to creating an effective contingency plan for your business

In five steps, you or your consultant can craft the best contingency plan for your organization.

  • Step 1—Identify risks: Assemble relevant department heads together to brainstorm potential internal and external threats.
  • Step 2—Conduct a thorough BIA: Evaluate the likelihood of each identified risk to prioritize from least to most severe.
  • Step 3—Develop a clear plan: Create a comprehensive plan that outlines detailed, actionable steps (for both immediate, short-term and long-term recovery) to minimize damage in the face of disruption.
  • Step 4—Secure approval: Present the plan to leadership for formal approval and prepare for company-wide implementation.
  • Step 5—Document and test the plan: Compile all information into a concise document that can be accessed quickly during an emergency.

Why hire a CGI consultant for your business contingency planning?

Disaster recovery plans are a component to long-lasting success in your industry. With our expertise and tools, creating a customized business contingency plan is simple. Meet with our business consulting experts today to discuss next steps.