Importance of Contingency Planning

importance of contingency planning

Designing a Roadmap for Your Business’ Future

Planning for the future is essential for businesses that understand the need to grow and adapt to market changes.  Without a clear roadmap of what the business plans to accomplish, how can leaders be expected to determine how it will be best accomplished?  Active business planning is the most effective way to help your organization achieve its strategic goals and to efficiently use current and future resources. Having a plan is important,  but what happens if things don’t go according to plan? As your business develops a roadmap and plan including the “what” and the “how”, as a leader, you also need to be accounting for the “what if”. This is where contingency planning comes in.
The “what if” involves risk management and successful businesses employ basic risk management practices to protect assets against economic and natural disasters.  Some organizations may even have backups in place, such as emergency computer services or manual accounting processes to ensure bills are sent or paid.  Most organizations wouldn’t even think about operating without property or casualty insurance, but often overlook the importance of contingency planning with respect to its most valuable business asset: its employees.
The loss of a key employee can be devastating to any business, but small businesses especially need to account for potential employee losses in continuity planning. In order to survive these kinds of disruptions, businesses need to employ strategic contingency plans that account for key individuals, and the need to expand or adapt the workforce to ensure the organization remains intact, and short- and long-term goals remain within reach. Leaders should take care to assess employee skills and responsibilities, and to analyze not only what employees accomplish on a daily basis, but what they could be called upon to accomplish should the need arise.
Businesses can plan for these risks by streamlining their recruiting process and quantifying the time required to recruit and train qualified personnel.  Employee skills inventories can aid a business in reassigning duties within the existing employee pool.   Active succession planning ensures that an organization has personnel ready and willing to step in when called upon, and identifying those individuals with high potential for growth can aid a business in achieving strategic expansion goals.
Strategic contingency planning utilizing risk-informed decision making helps leadership to develop business plans that accurately account for both the probability of a scenario and the severity should it occur.   Most importantly, pre-planning allows business leaders to make decisions and then execute—utilizing business resources to effectively further organizational goals without dwelling on or over-analyzing every potential liability.

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