Contingency Plan

Contingency Plan, plan B or back-up plan is an alternative plan intended to be implemented in case of unexpected or unwanted situation, such as a disaster or unexpected expenditure.

Where do we use contingency plan?

The contingency plan is devised for unexpected or unwanted situations, such as:

• natural disaster (floods, earthquake, etc.)
• man-made disaster (explosion, etc.)
• robbery
• unexpected staff change
• unexpected financial situation etc.

Risk management, crisis management, or project management are the major areas that work with contingency planning. For example, a back-up plan may entail the need to create a budget reserve in the event of unexpected expenditure, or the need to prepare various scenarios of how to proceed in the event of a disaster.

If everything goes according to plan, there is no unexpected situation that would result in implementation of a contingency plan. That’s why such a plan may never be used. However, it is definitely a good idea to have it ready so that there is no need for improvisation which is always risky - there might be no time to improvise or the team might be lacking enough experience to handle the situation.

Contingency planning is part of Risk Management, business continuity management or disaster recovery.

How does such a plan look like?

It is a set of steps that would be applied if an unexpected situation occurred and the original plan couldn’t be used. Depending on the situation, it may take the form of a master plan or a detailed sequence of steps that are to be taken in a particular unexpected situation in the future, so that either the original objectives can be met, the situation can be restored or at least the situation can be saved.

The contingency plan is devised based on a prior risk analysis or an impact analysis. It is created for scenarios that are critical to the business or its processes.