Contingency Planning and Crisis Management
Disasters and serious incidents happen. Does your business have effective contingency plans in place to deal with them?
This guide will give you information and advice about:
- Identifying key risks to your business
- Drawing up your contingency plan
Contingency planning is essential to ensure your business continues to survive and thrive after a crisis or disruptive event. Disasters and serious incidents such as flooding, fire, or the death of a key employee are relatively rare, but they do happen.
Identifying key risks to your business
You need to consider three types of risk when making your contingency plans:
- A major disaster that immediately prevents normal business.
- A gradually worsening situation that makes it difficult to operate normally.
- A series of small events happening simultaneously.
Risks to consider include:
- Physical problems – this includes things that might physically damage your property such as fire or flooding.
- Equipment failure – this covers any machinery which is essential to your operation including computers and delivery vehicles.
- Product failure – this could occur if your products cause injury or have to be recalled.
- External issues affecting your business – for example, a transport strike preventing you from getting a delivery to a key client.
- Supplier problems – any difficulties involving your major suppliers are likely to adversely affect your business too.
- Staff problems – these could include the death or serious illness of a key employee.
- Public relations issues – negative feedback about your company on social media sites, for example, could have serious consequences for your business.
- Radical changes in the business environment – this could include situations such as a highly aggressive competitor moving into your area.
- Legal threats – these are potentially diverse and can involve anything from liability claims to copyright issues.
Drawing up your contingency plan
- Take time to think about all the possible risks to your business, however unlikely, and make a list of them.
- Rank each risk in order of probability and in terms of the severity of the impact it will have on your business. This will help you assess your individual business’s needs.
- Decide who will be affected in each eventuality and how.
- List all the people and organisations that you will need to contact in the event of a serious incident – e.g. your staff, your customers, your bank, your insurers and your suppliers. Your list should contain relevant contact details wherever possible.
- Consider which risks are insurable and check that you have adequate cover. Fire, flood and theft aren’t the only risks to your business that you can insure against. Insurance is also available to cover risks such as the death or illness of a key person in your business or the legal costs of protecting your intellectual property. Insurance companies may reduce your premium if you have a contingency plan in place.
- Minimise the impact of serious incidents as far as possible. Make sure that you have adequate emergency call-out arrangements covering your essential equipment, for example.
Details of your contingency plan
Your contingency plan will need to cover several stages – what will happen in the immediate aftermath of a serious incident, how your business will continue and how it will get back to full strength.
Your plan should set out the order in which business functions will be resumed and who will be responsible for doing what.
You may need to make more than one contingency plan to cover different risks. For example you might need a specific recovery plan for disruptions to IT and telephony.
Plans should contain up-to-date details of anyone who will need to be contacted if a serious incident happens, as well as details of plumbers, electricians etc. You may also want to nominate someone as a spokesperson, or keep the details of a PR company in case your business is caught up in an incident that attracts media attention.
Testing your contingency plans
Once you have put together your plan, you’ll need to make sure that your managers and staff are familiar with it and understand what their roles will be.
As far as possible test your plans and gather feedback and lessons learned. You should then adapt them according to the results of your trial run.
Storing and maintaining your contingency plans
Copies of your plans should be stored away from the workplace to keep them safe. It’s important to make sure that plans are kept up to date – note emerging risks and keep contact details updated.
- Preparing for Emergencies – www.pfe.gov.uk – Government advice for businesses on preparing for emergencies.
- The Business Continuity Institute – www.thebci.org – promotes good practice in business continuity.
This Contingency Planning and Crisis Management business advice article published in association with Lloyds TSB.
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