The Benefits of Contingency Planning

by Cindy Phillips

A contingency plan is a backup plan, activated in the event of a disaster that disrupts a company's production and puts employees in danger. The goal of the plan is to safeguard data, minimize disruption and keep everyone as safe as possible. A company may never have occasion to use a contingency plan, but it is important to have one, keep it updated and train employees what to do if the need arises.

Minimizes Loss

When a business experiences a disruption, whether it is a power outage or a natural disaster, a contingency plan helps minimize the loss of production. A contingency plan may consist of rerouting data, emergency generators for power, escape routes for employees and supervisory duties for contingency team members. Plans to get production up and running in spite of unforeseen circumstances can be the difference between a company that survives a disaster and one that folds. There may be a cost associated with devising a contingency plan and maintaining it, but when measured against the cost of production loss, it will be minimal.

Prevents Panic

When a disaster occurs, people panic if they do not have a clear plan of action to follow. A well-documented contingency plan allows employees to move quickly into recovery mode rather than waiting for instruction. When everyone knows where to go, what to do and who to turn to for instruction, order can be maintained. Averting panic allows managers to focus efforts on recovery operations to minimize loss.


While business owners and managers may have thoughts about how to handle a crisis, they are not always comprehensive. By instilling a contingency plan, those in charge are forced to evaluate all possible ramifications in the event of a disaster. Devising a contingency plan is a methodical process. Evaluating the effects of steps A and B leads to the realization that steps C and D will also occur. Actually sitting down to create a contingency plan means looking at the big picture rather than a series of disconnected steps.


Don't wait for a disaster to happen before designing and implementing a contingency plan. Be proactive and put a plan in place even though chances are slim that you will ever need it. Create a contingency team to activate the plan when needed. Review team members on a regular basis and assign new employees to replace those who have left or would no longer be the best choice to carry out the plan. Provide regular training on the contingency plan to keep the team refreshed. Don't let the plan go stale, which can render it useless. Maintain equipment that is a part of the contingency plan. For example, backup battery power will prove useless in the event of a disaster if the battery life has expired.

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