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Contingency Planning: 
How To Write an Effective Contingency Plan for your Organization

At first pass, your organization's contingency planning and testing seems time-consuming and non-value added. 

And it can be! 

It also seems pessimistic: planning worst-case scenarios can be depressing work when most folks would rather be entering the future with a spirit of optimism.

However, the very process of contingency planning can get an entire organization positively thinking about the importance of various business systems. In a fast-paced environment, contingency planning can lead to implementing better systems and processes overall.

Late last century, the Y2K hysteria underscored the urgency for contingency planning. Today, most quality driven organizations will have a contingency plan and contingency planning process. Why?

  1. You need to effectively deal with a rapidly changing business and technology environment

  2. You need to understand and document the business processes that are vital to your company's business.

Bottom line? An organizational contingency plan can reduce business risk. 

A solid procedure can make contingency planning a manageable and positive experience that produces a workable plan.

Steps for creating a contingency plan

First, senior staff needs to decide who is the lead for contingency planning. Usually a Strategic Planning or Quality department manager is best suited for this task. A contingency plan is a requirement for many quality systems - you may want to go to your Quality Department for guidance on plans or processes that are already in development.

The company-wide contingency plan leader provides tools, skills and a knowledge base so that each department can write its own contingency plans. (A common misconception is that the contingency plan leader should be writing all contingency plans. This would be near-impossible: subject matter experts closest to the system have the best working knowledge, and therefore are best suited to writing and brainstorming with their department.) The leader's key functions are to provide a common means for writing and reporting; to train; to set deadlines; to promote enthusiasm and to mentor.

For example, there are many ways to write and store plans. Many templates and databases are available for an organization. The lead decides how plans are organized: will the organization use a similar set of folders? A database? A special network drive? The intranet? The company-wide lead provides the organization with common tools and training so that everyone is following a similar process that produces a standardized plan.

After the leader trains and equips a person in every department to act as an area leader, the localized contingency planning process includes the following elements:

  1. List every business process in the department. (Example: Payroll might be listed in the Human Resource’s plan.)

  2. List the tasks for every business process and the steps it takes to complete these tasks.

  3. For every step, list every dependency (computer hardware, software, external & internal suppliers.)

  4. Rate the likelihood for each dependency to fail (Prioritize! Usually a 1-High, 2-Medium or 3-Low works well. Alphabatizing with H, M or L usually doesn't work as well, because these three letters - alphabetically - don't follow your priority. Remember this when you design your database! )

  5. Assume that every dependency will fail, beginning with 1-High dependencies. Write a contingency action that accomplishes the task without relying upon the dependency.

Once you have analyzed business functions this way, you will be able to create contingencies at the appropriate places. In many areas, the contingency will be at the task level; in other areas at the process level; still others may be at the department level.

In some cases, no viable contingency is possible. If power goes down, and you have no generator, you aren't doing any business. If this is the situation with any specific process, make a note of it and describe what you’ll do if the dependency fails.

Structure your contingency plan positively - involve the appropriate people and the right amount of people - it’s a big task, after all. It will require input from many.

Testing Your Contingency Plan

Testing every contingency in your plan is time- and cost-prohibitive. To make testing manageable, test in four stages. Each stage should build on the results of the previous stage. If an area proves to be unsound, or if it conflicts with other contingency plans, you can re-write and re-test the plan.

Stage 1 - Senior Staff Review

The senior staff selects an internally-publicized date and time to review all contingency plans. Aside from ensuring overall business soundness, this review also serves to recognize people who have thoughtfully completed their assignment. Knowledge of a firm date for a senior staff review will increase quality, accuracy and timeliness.

Stage 2 - Interdepartmental Reviews

Each department should review another department’s plans. The goal of this stage is to find bottlenecks, identify conflicts and allocate resources. If possible, departments that are "downstream" in the business process can review the plans of "upstream" departments.

Stage 3 - Failures in Critical Systems

This testing can be localized within departments. It involves simulating system or vendor failures. You don't actually have to shut down critical equipment or processes - you can role-play a "what if" scenario. You can either run a "surprise" drill or plan a role-playing event for a specific time.

Stage 4 - The Real Deal

This testing involves short-term shutdowns in key areas. If possible, these tests should be conducted in a real-time environment. The goal, of course, is to fully test the contingency plan. Concentrate this last phase of testing only on areas that have a high business priority and a high risk for failure.

By implementing testing in four stages, you can optimize your time and accomplish the goal of proving that the contingency plan is valid.

Creating and Testing: Summary

While creating and testing contingency plans may seem like a time-consuming, non-value-added investment in resources, it can be planned to create positive change within a company. When people take a closer look at their everyday assumptions about work to ask a variety of "What if. . . .?" type questions, the results can often lead to more efficient processes.

Remember: the Chinese symbol for "crisis" and "opportunity" are the same.

Laura Bergells is an internet marketing consultant.
Visit her multimedia website to learn how to effectively market your small business online.

 



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