Contingency planning protects businesses.
Contingency planning helps companies handle adverse events with minimal interruption to business activities. Effective contingency plans identify threats to the organization, methods to verify when a threat condition occurs and options to deal with the threat. Employees need training in corporate-level contingency plans, and risk management contingency planning should be part of project management.
Financial Loss
Contingency planning includes purchasing business insurance, such as liability coverage, property insurance and business income insurance. A business needs liability insurance for products or services that cause damage to an individual. The harm may come from committed acts, such as faulty design, or from acts of omission, such as failure to warn of hazards. Property insurance includes coverage for loss due to theft, accidental damage and acts of nature, other than floods. Business income insurance provides compensation for losses in revenue due to a disruption of business operations, and may include costs of leasing temporary space if you need to change your location during repairs.
Data Loss
Computers store valuable information that allows businesses to maintain financial controls and monitor operational and project performance. Customer and employee information lives in computers, often without paper backup. Contingency planning must include routine, off-site storage of data. Small companies and sole proprietorships can choose online data storage services. Larger organizations should establish data backup procedures for critical information. Although you can save daily data backups on-site, effective contingency planning requires a remote storage location to protect against property damage.
Project Risk Management
Managing project risks involves using experience gained from previous projects, either directly or through archived lessons learned stored in the corporation's documents. Chapter 11 of "A Guide to the Project Management Body of Knowledge" from the Project Management Institute suggests that project contingency planning begins with identifying potential risks to project success. Following identification, managers assess each risk qualitatively in terms of potential damage and quantitative probability of occurrence. Risks that rank high for damage costs or likelihood require contingency plans.
Problem Prevention
After developing contingency plans, senior managers should distribute procedures and guidance to all employees, based on the employee's location and job responsibilities. Formal training programs reinforce the need to prevent problems and recognize early signs of threat conditions. Establishing a succession plan for key positions and a decision-making hierarchy helps employees find the appropriate contact person when needed.
Tags: contingency plans, contingency planning, Contingency planning, Contingency planning, income insurance, insurance business