An Overview of Business Contingency Plans | Lucidchart Blog
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Natural disasters, data hacking, theft—your organization has likely prepared for catastrophes of this nature.

But what about smaller events? Like your biggest customer suddenly switching to a competitor? Or your entire sales staff getting food poisoning at their annual retreat?

Many circumstances have the potential to disrupt your business, or worse, shut your business down. A business contingency plan can save the day. The steps listed below will help you create business contingency plans so you can prepare for the worst.

What is a contingency plan?

A contingency is defined as “a future event or circumstance that is possible but cannot be predicted with certainty,” either on a large scale, such as a natural disaster, or a small scale, such as employee theft.

A contingency plan is a roadmap created by management to help an organization respond to an event that may or may not happen in the future.

The purpose of a business contingency plan is to help your business resume normal business operations after a disruptive event. A contingency plan can also help organizations recover from disasters, manage risk, avoid negative publicity, and handle employee injuries.

By having a business contingency plan, your business can react faster to unexpected events. The faster your organization is able to get back up and running, the less damage your profits and revenues will take.

How to develop contingency plans

Thinking about all the possible risks to your organization can be overwhelming, but you can reduce that anxiety as you develop contingency plans. The four steps below show you how to develop a business contingency plan to help you prepare for the unexpected.

1. Identify the risks

Before you can prepare for a disaster, you need to know what disasters you’re preparing for. Think about all the possible risks to your organization, including natural disasters, sudden changes to revenue or personnel, or security threats.

As you're brainstorming, involve individuals from other teams to ensure you’re preparing for risks to your entire organization and not just your department. In Lucidchart, you could start a mind map to capture and organize everyone’s ideas in real time.

You may also want to use a cause-and-effect diagram, also known as a fishbone diagram, to analyze your business processes for areas of risk—you’d be surprised how long your list of possible risks can get.

fishbone diagram
Cause-and-Effect Diagram Template (Click on image to modify online)

2. Prioritize the risks

Make sure you spend your time and resources preparing for events that have a high chance of occurring. For example, you may have listed earthquakes as a possible risk. However, if your area doesn't experience many earthquakes, you wouldn’t want to spend all your time preparing for this event. If your area is prone to flooding, you should spend more of your resources preparing for floods.

To determine which risks are more likely to occur, use a risk impact or probability chart. These charts will help you to estimate the likelihood that an event will occur and determine where to focus your efforts.

risk impact or probability chart
Risk Impact/Probability Chart (Click on image to modify online)

3. Create contingency plans

Once you’ve created a prioritized list, it’s time to put together a plan to mitigate those risks. Your plan should include a timeline or step-by-step guide that outlines what to do once the event has happened and how to keep your business running. Include a list of everyone, both inside and outside of the organization, who needs to be contacted should the event occur, along with up-to-date contact information.

You can also create a list of ways to minimize the risk of these events now and start acting on it. For more information, take a look at our articles on risk assessment and risk management.

4. Maintain the plan

Even after you’ve created a contingency plan, the process doesn’t stop there. You’ll want to communicate the plan to everyone who could potentially be affected. You should also describe what their roles and responsibilities are during a time of crisis.

Review your plan frequently. Personnel, operational, and technological changes can make the plan inefficient, which means you may need to make some changes.  

Visuals can help your employees understand the contingency plan more clearly and remember it in the case of an emergency. To help you create a detailed contingency plan, start with the Lucidchart flowchart template below.

contingency plan example
Business Contingency Plan Example (Click on image to modify online)

Be prepared for anything

A business contingency plan helps you prepare your organization to handle anything unexpected. Discover how Lucidchart can help you create a business contingency plan with free, easy-to-use templates.