What is a Contingency Plan? And How to Create Your Own

Having a contingency plan for business helps you stay prepared and ready to adapt. Contingency planning and risk management are closely related but different processes. Contingency planning addresses the “what if” situations and develops a plan that will work around those situations. Risk management is a proactive approach that companies use to prevent loss or disasters.

Craft a resilience plan for your hospitality business, including hotels, restaurants, or travel services. This BCP template for Hospitality will help you establish measures to handle potential emergency situations and ensure customer satisfaction. Once you’ve created your contingency plans, share them with the right people. Make sure everyone knows what you’ll do, so if and when the time comes, you can act as quickly and seamlessly as possible.

Insuring your business against interruption or unforeseen events

Get essential insights to help your security and IT teams better manage risk and limit potential losses. If you’re ready to stop relying on crossed fingers and start building a real continuity plan, we’ve got your back. Here are some simple, relatable examples that show how businesses stay operational even when things don’t go to plan. Start your free trial with Shopify today—then use these resources to guide you through every step of the process. That’s why we’re doing all we can to make your insurance a bit simpler.

Create contingency plans for the most significant risks

Measures could include employee safety protocols, rules for entering the workplace, communication with stakeholders, and shoring up remote-work support and technology. Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective. Common challenges include securing executive buy-in, managing resource constraints, and maintaining plan relevance in a dynamic business environment.

Conduct Critical Function Analysis

Legal Templates cannot and does not provide legal advice or legal representation. All information, software and services provided on the site are for informational purposes and self-help only and are not intended to be a substitute for a lawyer or professional legal advice. Legaltemplates.net is owned and operated by Resume Technologies Limited, London with offices in London United Kingdom. This way, you can more easily determine what to prioritize in an emergency.

What is a contingency plan? A guide to contingency planning

Find sections for business impact analysis (BIA), recovery strategies, plan development, and testing and exercises. Share the document with stakeholders to keep everyone apprised of the organization’s fail-safe contingency plan. These plans often address both smaller-scale disasters and major so-called act-of-God events. Standardize and simplify your process of creating contingency plans for effective preparation and response to business disruptions using contingency plan templates. If you base your understanding of contingency plans on the facts and details above, you may conclude that it only covers natural disasters. But keep a note on the possibility of other unforeseen circumstances as well.

Communication Plans

If you’re using Cascade strategy templates, you’ll have these vital elements ready and waiting to help you plan faster and better. To build a resilient BCP, thoroughly examine your business, engage all stakeholders, and really understand your key business functions and processes. The more managers who will participate in the plan, the more productive and successful it will become. The main difference between a contingency plan and a continuity plan is that the former is proactive, and the latter is reactive. In other words, a contingency plan approaches problems even before they occur while a continuity plan is in use after the issues took place.

• Determine whether the plan applies to specific departments, one location, or your entire company.
• Effectively manage internal and external communications during a crisis with this Crisis Communications Plan Template.
• These plans hedge against supply chain disruptions caused by events like natural disasters or technological outages and help organizations reduce downtime and ensure real-time operational capabilities.
• A contingency plan, sometimes referred to as a “plan B” or a “backup plan,” is a document that sets out what your organization will do in the event that something bad happens in the future.
• With it, you can quickly create an actionable Continuity of Operations Plan (COOP) that guarantees your business’s preparedness when disaster strikes.
• This article provides you with 16 free, customizable business continuity plan templates that are prefilled with examples, making it easy to create a plan that meets your unique needs.

Contingency planning makes sure the whole business stays on track no matter what. No one wants Plan A to fail—but having a strong Plan B in place is the best way to be prepared for any situation. With a solid backup plan, you can effectively respond to unforeseen events and get back on track as quickly as possible. Every contingency plan should be shared with employees well in advance of needing to enact the plan. Employees should be trained on what to do in specific scenarios and help keep the business operations running as smoothly as possible.

Appoint several people to be in charge during a crisis so they can have one another’s support. Establish a clear chain of command to minimize arguments and promote efficiency. It lets the company’s employees adapt strategies as necessary and work towards continuous improvements, allowing the company to experience long-term success no matter the obstacles it encounters.

Creating a business continuity plan before you need it can help you prepare for the unexpected. It helps you be proactive so you don’t have to devise a plan amidst a disaster. When you test and review your contingency plans, you’ll sometimes want to make changes to them.

However, when it comes to putting your plan down to paper, we recommend consulting with professional bodies or other experts. The Business Continuity Institute and the ISO – Business Continuity Management Systems can help with business continuity planning standards and frameworks. They also provide training and resources (many of which are free) to businesses who need help with continuity planning. Business continuity planning refers to the systems and procedures that allow businesses to maintain or quickly resume functions in the event of a major disruption. It would be too time consuming to create a disaster recovery plan for each risk you’ve identified.

The frequency of testing depends on your industry, specific risks, and regulatory requirements. However, it’s generally recommended to test your plan at least business contingency plan example annually, and more frequently for critical functions. Testing can range from tabletop exercises and walkthroughs to full-scale simulations. Regular testing helps identify gaps in your plan and ensures your team is prepared to respond effectively. Running a business is a bit like navigating a ship through unpredictable waters. A business continuity strategy template is your ship’s emergency protocol, guiding you through turbulent times and ensuring you reach your destination.

Engage representatives from all critical departments—IT, operations, finance, HR, communications, and legal—to ensure comprehensive risk assessment and planning. This cross-functional team can identify potential vulnerabilities specific to each area and contribute specialized knowledge to develop effective mitigation strategies. As TechTarget highlights, gathering information from diverse sources is the first step in creating a solid business continuity plan. This collaborative process fosters a sense of shared ownership and accountability, crucial for successful plan execution. Remember, your business continuity plan should be a living document that reflects the collective insights and expertise of your entire organization.

It covers essential processes like protecting assets, handling human resources issues, and dealing with business partners. Even if your contingency plan is working as intended when you test it, there’s no guarantee that this will remain the case. To do this, run a simulation of the incident that this plan is designed to deal with, and see how it performs. If you need to let management know how well the testing went, you can use Wrike to write a report and send it to them. Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

Because risks evolve, revisit and revise your plan to be better prepared to avoid disasters. Ted Jackson is the co-founder of ClearPoint Strategy, a B2B SaaS platform that empowers organizations to execute strategic plans with precision. A Duke and Harvard Business School alumnus, he brings over 30 years’ experience in strategy execution—including 15 years with Kaplan and Norton on the Balanced Scorecard. Ted works closely with customers to ensure the software meets unique challenges, continually refining the platform with his global expertise.

Think of project risk management as planning for the little bumps along the way. It involves identifying potential risks early, monitoring them closely, and preparing a plan of action. This usually means setting up a risk register to track issues and tackle them before they become big problems. Overall, you should use a contingency plan whenever there is a potential risk or uncertainty that could impact the success of your project or goal, or when there is the possibility of emergencies.