3.6.2: Contingency planning

contingency planning

• strategic method designed to identify potential crises

• works out how to protect a business from the worst consequences

• helps business exploit opportunities

• helps with:

  • clarifying future uncertainties

  • identifying risks and opportunities

  • preparing for eventuality

  • teaching managers how crises occur

  • understanding cause and effect of changes

contingency planning - steps

1. identify trends and issues: checking internal and external environment to identify emerging threats

2. identify possible crises

3. plan a response: identify exact impact of crises and plans to deal with them

4. identify most likely crises: prioritise most likely crises

5. capitalise on crises: applying planned response

risk assessment

• identify possible future crises and risks

• examining what might cause harm to people

• plan to protect workers

• compliance with health and safety laws

• legal right to protection for workers

• decide who might be harmed and estimate probability of events occuring

possible crises

1. natural disasters:

   • extremely bad events

   • happen suddenly

   • caused by factors beyond our control

   • i.e. floods, hurricanes, eruptions, tsunamis, earthquakes, fires, snowstorms, epidemics

   • high levels of damage, death and disruption

   • MNCs - likely to be more exposed to these

   • large scale disruptions

IT systems failure

• dependence on IT systems

• large business = more investment in IT

• IT failure or cyberattack could be disastrous

• small business = modest investment in IT

• threat of cyberattacks

  • stolen personal data

  • attacked by hackers using ransomware

loss of key staff

• losing key members causes difficult - business isn’t prepared for it

• can be an issue in small businesses

• causes: illness, long term incapacity, death

planning for risk mitigation

• identify, assess and prioritise risks

• deal with impact of risks to business operations

• strategies to reduce damage:

  • set up in a location not affected by potential hazards

  • ensure premises are constructed according to building codes designed for safety and protection

  • take out insurance polities covering loss

    • business interruption cover

  • ensure data stored is secure and backed up

  • organise backup power

  • ensure valuable assets are protected

  • ensure access to emergency funding

  • ensure adequate communication channels in crises

  • produce business continuity plan

planning for risk mitigation - business continuity

• minimise disruption

• getting the business up and running after an incident

• 4 stages:

  1. carry out a business impact analysis

  2. formulate recovery strategies

  3. plan development

  4. testing and training

planning for risk mitigation - succession planning

• identifying current employees who have the potential to play key future roles and helping them develop their skills

• helps a business deal with losing key staff

• develop staff needed to fill posts upon expansion

• key steps:

  1. identify characteristics of a successor

  2. decide how successor will be found

  3. rigorous selection process

  4. make decision

  5. communicate decision

  6. implement training and prep plan