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More Than a Plan B: How to Write a Business Contingency Plan


| By Stuart Ridley | May 27, 2020

A business continuity or crisis management plan can help your business navigate disruptive events like COVID-19 (coronavirus) and get on the road to recovery.

A business contingency plan is essential for any SME, especially during times of crisis.

Life is full of unexpected events that can derail even the most robust businesses and economies, and the world is experiencing one now with the COVID-19 (coronavirus) pandemic. No one can stop unplanned and unexpected events from happening but what businesses can do is create a plan for when a crisis hits. If you’re a business owner, it’s more essential than ever to ensure you have a business continuity plan to guide you through the crisis and out the other side.

Why You Need a Business Continuity Plan

A crisis management plan ensures any business is prepared for any disruptive events.

Just as it's important to update your business plan regularly to help you achieve your goals, you can also respond better to challenges such as COVID-19 (coronavirus) with a regularly updated business continuity plan.

Extreme athlete and motivational speaker Turia Pitt says a good way to face challenges is by building a strong mindset. "A strong mindset won’t stop hard times from happening," she writes on her blog. "But it will change how you handle them." Mindset is also the key to risk management in business: rather than worrying about disruptive events that might happen, focus on the steps you can take each day to prepare a response.

How to Plan for When Things Don't Go to Plan

Start with a risk management plan that identifies:

  • Essential workers: Are there people the business can’t do without? Who can focus on crisis management and who will cover the essential tasks in their regular workloads? How will reporting lines change?
  • Business critical functions: Which day-to-day activities, systems and equipment are needed as a bare minimum to keep the business operating? What downtime might be acceptable for each function? What are the dependencies between different parts of the business?
  • Activity risks specific to your type of business: What are the inherent risks, such as technology failure, supply chain interruptions, work health and safety issues or exposure to changes in climate and natural disasters?
  • Financial risks common for most businesses: What are your cash flow risks? Are there economic forces that might affect your business, such as changes in interest rates and local, national and global financial crises?

Next, Develop a Risk Management Action Plan

Australian emergency management agencies use a risk management model called PPRR – Prevention, Preparedness, Response and Recovery. It also works well for businesses — and can help save time and money. The four main action strategies are:

  • Prevention: what actions you can take to prevent an incident from happening or reduce the damage it could cause.
  • Preparedness: what you can do before an incident to ensure your business can effectively respond – and recover.
  • Response: what you can do during an incident to reduce the impact on your business.
  • Recovery: what actions you can take after an incident to speed up recovery time with the least disruption to business.

SEE ALSO: Let the Geek Guide You: Tech Essentials for Your Home Office

All businesses should develop a Risk Management Action Plan for times of crisis.  

Your Contingency Plan for When It Hits the Fan

Risk analysis can be a fine art, though, at a basic level, it can help to rank risks by the severity of their impact on your business. Some risks, such as fires and medical emergencies, will need response plans that cover several levels of impact.

An incident response plan will identify several levels from mild (toaster fire) to high impact (building fire) and your corresponding response. High impact risks will typically demand more of your people and resources when you must respond, so you'll need to identify:

  • Who will contribute to creating and updating each action plan and how will updates be communicated? How often?
  • What training is needed? And how often? – so people know their roles when responding to an incident
  • What are the roles and responsibilities of the incident response team?
  • What is the immediate response plan? (People, equipment and processes needed for the response)
  • Who needs to be contacted when an incident happens?
  • How will information about the response be communicated – and how much detail does each person need, depending on their role, responsibility or impact on them?
  • What are the action plans to support essential people, systems and equipment to keep the business running?
  • What is the recovery plan?

Some risk incidents give you plenty of warning, so if you know how to spot them early, you'll have more time to prepare for and reduce their impacts. Others might happen suddenly, but ensuring your risk management and business continuity plans are up-to-date will help you respond faster and more effectively.

Download some useful templates to help your business prepare