Contingency, Contingency, Contingency

Contingency, Contingency, Contingency – They’ve All Got a Contingency!

Contingency planning is not reserved for governments or corporates and it’s something that all business owners should always have in hand, in case the worst should happen, and even perhaps if just something bad occurs. So what is a contingency? The dictionary states it as a chance, accident or possibility on something uncertain. This is somewhat vague and not particularly relevant which is perhaps why so many of us don’t plan for them. The need here is really about finding the balance between optimism and pessimism – realism perhaps. We don’t want to be seen to be the harbinger of doom and try to account for every possible pitfall that could come our way. Likewise the opposite ‘rose tinted glasses’ point of view of life is dangerous – ignorance maybe bliss but it could give you a bite that will hurt.

Where to begin?

Taking a pragmatic approach at the beginning is fundamental. It is also true that many heads in this situation are better than one, so if you have a management team get them involved. By all means take the initial pessimistic point of view and list all the negative possibilities, then boil it down to those eventualities that matter to you and your business.

What next?

Once you have your list of the most critical events that could impact your business, you also need to consider whether these events could continue for longer than expected. For example an IT melt down or a power outage for 1-2 hours or 1-2 days compared to 1-2 weeks is a different proposition. Put on-going events as separate events even though the resultant plans maybe similar.

Depending on how exhaustive your list is, it would also be advantageous to put an impact level against each of the contingencies, in other words how business critical is each event. Using the above example of time a 1-2 hour power outage would be low impact and 1-2 week outage would be high impact. You would then need to assess the list again and put a probability of each event occurring – again high, medium or low.

You now know which events are most likely and have the highest impact and which are least likely and have the least impact. The impact criteria and probability criteria also need to be relative in other words measured against the lowest / highest impact event and the least / most likely event. This is a subjective list so getting more than one point of view from within the business will ensure all events are initially included and they are sense checked.

An example of this would be a fire within the business which would certainly be high on impact but probably quite low on probability. The impact for a manufacturing company would be higher than that of an office based business. This is because if temporary offices are found and the IT backed up, the office based company can get back up and running relatively quickly, which could not be said of the manufacturing site. The probability of a fire in a factory is also probably higher than that of an office.

Some contingencies you may not have thought of

Most ‘what if’ scenarios that are automatically thought of are based around disasters or emergencies (flood, fire, burglaries, IT etc) but there are some not so obvious ones – these could include:

  • Loss of your biggest customer – their loyalty was overestimated.
  • Loss of a major supplier – not as financially sound as you thought.
  • Market shift – a new product/service is cheaper and better.
  • Technology improvement – similar to a market shift but technology driven. Are you keeping up-to-date with the latest trends?
  • Merger and Acquisitions – a competitor gets bought by a highly professional corporate.
  • Illness – a serious illness to a key member of staff or an illness affecting a large number of staff at the same time.

Making Plans

You now have a complete list of potential events, vetted by key members of staff and they have a relative probability and impact on the business. From the outset, prevention is always better than cure, so is there anything on the list that could be avoided or the probability reduced relatively easily and cheaply? Get the quick wins out of the way.

A plan then needs to be drawn up for each contingency – this will consist of a set of tasks that need to be carried out. Each task will need to have the relevant person in immediate charge of it and a time frame for when to start and complete it. Some tasks may also be dependent on the completion and outcome of other tasks. It is also advisable to have someone in charge of co-ordinating all of the tasks and also a stand in if that person is not available. The plan needs to be written up and easily accessible to the co-ordinator at the relevant time – even perhaps stored off site in case the event is a building fire.

In much the same way that the management team are responsible for creating the list, they should also be responsible for writing the plans and ultimately putting the plans into action. Running through the plans to ensure everyone knows what they will do and when is invaluable, because it is too late after the event.


You may think that all this building of plans sounds like a lot of potential wasted time, money and effort, for events that most probably won’t happen. I hope that you are right in that that they won’t happen, but by having a plan a true disaster could potentially be avoided. That disaster being a massive downsizing, or even the demise, of your business. Once the plans are made they need only be reviewed periodically to ensure they are still relevant and you can feel happy that you are prepared just in case.

If you would like a more detailed chat about how to go about building your plans please do get in contact.


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