business contingency plan

An Overview of Business Contingency Plans

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Posted by: Lucid Content Team

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 develop 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 developing a 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 write a contingency plan

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. 

2. Prioritize the risks

Make sure you spend your time and resources preparing for events that have a high chance of occurring as you write and develop your contingency plan. 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 scale. These charts will help you to estimate the likelihood that an event will occur and determine where to focus your efforts.

illustration of people working together

Get started prioritizing all potential risks with this risk impact scale template.

Start prioritizing

3. Develop contingency plans

Once you’ve created a prioritized list, it’s time to put together a plan to mitigate those risks. As you write a contingency plan, it should include visuals or a 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. 

4. Maintain the plan

Even after you’ve developed 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.  

Contingency plan example

To help you prepare for the unexpected, get started with these Lucidchart contingency plan examples below. 

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

Ready to get started? Business contingency plans help you prepare your organization to handle anything unexpected. Give your employees a realistic plan for how they should handle any problem that arises. 

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