The Contingency Planning Process
There is much confusion over what constitutes a contingency plan and why an organization would require one. A contingency plan is a well thought out, alternate or radical course of action that avoids disruptions in normal business operations due to any type of operational error. Contingency planning is a non-linear process that cannot be performed by a single task force or business unit.
The planning process must rather be approached as a centrally coordinated, yet highly distributed series of facilitation exercises. In order for management to successfully initiate a contingency planning project, they must recognize and incorporate two key sets of deliverables; the bottom-up, tactical piece of the plan and the top-down, business-driven component of the plan.
The bottom-up process assesses tactical impacts of a system problem, project overrun, data interface error or supply chain interruption. Top-down contingency planning deals with failures in mission critical functions and the ability of business units to work around or deal with those failures to ensure business continuity. Integrating bottom-up plans and dependencies with top-down, business-driven contingencies allows an enterprise to:
- Ensure that critical organizational components have contingency plans;
- Enable contingency cost and failure probability analysis; and
- Verify that bottom-up plans do not conflict with top-down business strategies.
Managing the invocation of contingencies may not be a factor that many contingency planning teams have yet considered. When a contingency for a supplier is invoked in one business unit due to a supply chain failure, a second business unit that utilizes that same supplier should have up-to-the-minute information on how to deal with this interruption. The establishment, evolution, reporting, invocation and historical tracking of contingency plans across an enterprise require the creation and deployment of a contingency planning database.