Do you know how to act when faced with critical situations in your company? We’re talking about situations that put the future of the project at risk. Chances are your answer is no, so it’s time to use contingency plans.
Have you seen what happens when users start complaining angrily on social networks?
Many companies don’t overcome this problem, and there’s no guarantee that you can.
It’s for that reason that a contingency plan is non-negotiable if you want your business to be able to have a solid and stable future.
Let’s see how you can do it:
Table of Content
- What are contingency plans?
- Steps to develop a contingency plan
- 3 Mistakes to avoid in contingency plans
What are contingency plans?
A contingency plan is a strategy that helps an organization know how to respond in times of uncertainty.
These events often divert the company from its original objectives, so it’s essential to have a plan for knowing how to act in each phase.
It’s true that natural disasters affect people, cities and nations in general. Well, there are situations that can cause the same damage to companies, so you must be prepared for times of crisis.
In short, you will have a roadmap detailing what to do every step of the way to overcome those hours of turmoil that generate so much distress.
This explains why some companies survived such important events as the arrival of the pandemic or the conflict between Russia and Ukraine, for example.
Steps to develop a contingency plan
What we love about this type of plan is that it adjusts to the size and characteristics of your organization. This means that you can create a plan for your department or for the entire division.
Want to know the steps to develop one? Check it out below:
Step 1: Develop your list of risks.
How can you overcome risks if you don’t first identify them? This is your first task, to identify what hypothetical threats you will face in the future.
Make a list of everything you might face and divide those items according to priority level, as there are some that might affect you more than others.
Once you have them, you can move on to the next step:
Step 2: Evaluate the risks according to severity and likelihood.
Do I need to create a contingency plan for each risk? No, don’t worry, these plans require work, but you don’t need hundreds of strategies for each threat.
After you have your list, we recommend that you sit down with your team to identify the impact of each risk and rank them from highest to lowest.
One dissatisfied customer is not the same as a thousand angry customers. The impact is different, so you will have to act differently.
Step 3: Identify the most important ones
Okay, you have already assigned the level of severity and probability to each problem, now it’s time to decide which are the most relevant for the company.
For example, if you’ve assigned a high probability and high risk to a problem, you should pay more attention to it than to a problem that has a low probability and low severity.
At the same time, you should not forget about those that are low probability and high risk, because although they are unlikely to occur, if they do, the consequences could be very negative.
Step 4: Contingency plan for major risks
Each risk you have identified as a major risk should be given a special focus. Experts recommend creating a separate plan for each one, so you make sure you are prepared for the most uncertain times.
You can brainstorm and then determine what actions you will take in the hypothetical case that the situation reaches the company.
In addition, you will have to take into include details such as:
- Triggers that will set your plan in motion.
- The immediate responses you should give.
- Who will participate.
- Responsibilities of each member.
Step 5: Get approval
You don’t approve the contingency plan on your own. The reality is that you must send the proposal to key members of your team for their approval.
Give them free rein to suggest changes and give feedback. Remember that this document could be that lifeline in case the boat sinks, so don’t underestimate it at any time.
Okay, the plan has been approved, now it’s time to share it with the entire organization, no one can be left unnoticed.
It doesn’t matter if they are part of the people who will execute the strategy, everyone must be aware of what should and should not be done at a moment of maximum risk. This will be the key between the success and failure of the strategy.
Step 7: Review it periodically
Last but not least, you should monitor the plan from time to time to ensure that it remains up to date with current threats.
Remember that the world keeps turning and threats are advancing rapidly. If you’re not paying attention, your contingency plan could become anachronistic.
3 Mistakes to avoid in contingency plans
Have you already decided to create a contingency plan for your company? Discover some of the mistakes you should avoid to reduce risks as much as possible:
1. Not thinking about plan B
Yes, we know, there are business cultures that are so narrow-minded that they are incapable of accepting a plan B. No matter what benefits it provides, they simply don’t want to lose their “focus”.
That’s why it’s important that you know how to sell the project very well, and the idea is to be prepared for the eventualities that will come in one way or another.
First check how open-minded your company is before taking the next step. This will save you a lot of time and dedication.
2. Not having the expected support
This is closely linked to the previous point, but this time we’re talking about the moment when you finish your contingency plan and no one in the team accepts it.
This can be extremely frustrating, because creating a contingency plan takes time and a lot of effort. Therefore, the best thing you can do is to test the management’s stance to identify if they are willing to look at a strategy to deal with the threats.
This way you won’t waste your time and will focus on what will be productive.
3. Not supervising them once they are completed
A contingency plan takes so much work that the first thing we tend to do when we finish it is to forget about it forever. This is one of the biggest mistakes you can make.
Remember to take a look at it from time to time to verify that it’s still valid in the face of current threats.
What other mistakes do you think we should avoid when creating a contingency plan? We’re all ears!