A solid contingency plan can save many headaches businesses of any size. ADOBE STOCK IMAGE

IT’S YOUR BUSINESS: Contingency planning

Joe Smith's monthly business column

JOE SMITH

Special to The Record

Most often, contingency planning revolves around major crises like floods, fires, major storms or other natural disasters. However there are other situations such as an interruption in your IT systems, your primary supplier goes out of business, or in today’s world a pandemic that can affect your business.

If there is one thing businesses have learned as a result of this COVID pandemic it’s the importance of being able to act quickly in a crisis situation. While we can all hope that we will never again have to cope with a pandemic there are things you can do now to help mitigate future crises.

In developing a contingency plan, the first thing you must conduct is what is called a risk assessment. Risks will be unique to your kind of business, so it is important to identify those key functions that will affect your business significantly if they are interrupted.

Along the same lines, it is important to be able to identify threats such as loss of your internet connection or other technical failure, sudden loss of a key staff member, or a new competitor moving into your market. You’ll probably end up with a long list, so it will be necessary to prioritize.

For each risk or threat create some scenarios that may arise which you will need to address and then make plans on how you will deal with them; what steps you will need to take and how you will communicate with those who may be affected such as staff, suppliers, customers or the general public. By working through several scenarios you can clearly identify areas that will require you to make a response.

Contingency planning is not limited to dealing with adverse situations. There may be opportunities for expansion that require an increase in productivity that will cause you to search out new sources for services or raw materials. For example, a sudden increase in customer demand, or the opportunity to develop a new product or service because of market conditions can trigger one aspect of your contingency plan.

Developing a contingency plan should not be an onerous task if you have prepared a proper strategic plan. This should have already identified a number of issues through a strengths, weaknesses, opportunities, threats (SWOT) analysis.

One of the best ways to develop a contingency plan is to create a chart or template that clearly outlines each situation. There are many templates available through the internet that can give you a head start on what needs to be done.

Given the state of the world over the past nine months now is a good time to make contingency planning a regular part of your operations. By having a solid contingency plan in place you will always be prepared to respond to any situation from small problems to worst-case scenarios.

Joe Smith is a communications consultant and an accomplished fine artist. He can be reached via email joesmith@shaw.ca

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