Contingency Plans in an Operational Plan  – Skillmaker (2024)

Article written by Maria Veneris, 1 February 2024

What are contingency plans?

A contingency plan is a backup plan that goes into effect if an unexpected event or situation disrupts the normal operations of a project or business unit. It helps to minimise the negative impacts of the disruption and ensure the continuity of the work. It also puts into place strategies and actions to mitigate risks.

These plans are designed to ensure that businesses can continue to function effectively, even in the face of unforeseen circ*mstances¹.

Some examples of events that could trigger a contingency plan are:

• • Natural disasters – floods, earthquakes, fires.

• • Cyberattacks – hacking, malware, ransomware.

• • Equipment failures – power outages, network issues, hardware breakdowns.

• • Human errors – data loss, miscommunication, mistakes.

• • Market changes – competitor actions, customer preferences or regulatory updates.

• • Staff issues – absenteeism, turnover, conflicts.

Why do operational plans need contingency plans?

They help to:

• • Reduce the likelihood and severity of risks by identifying and addressing them in advance.

• • Enhance preparedness and resilience of the business by having alternative solutions and resources ready.

• • Improve the decision-making and communication processes by having clear roles and responsibilities assigned.

• • Maintain the reputation and trust of the business by demonstrating professionalism and reliability.

• • Achieve the objectives and outcomes of the operational plan by overcoming the challenges and obstacles.

What are the key components of contingency plans in an operational plan?

The key components are:

• • Risk assessment: The process of identifying and analysing the potential risks that could affect the operational plan. Involves determining the probability and impact of each risk, as well as the existing controls and mitigation measures.

• • Response plan: Outlines specific actions and steps that will be taken to respond to each risk if it occurs. It involves defining the trigger points, roles, responsibilities, resources, tools and communication channels.

• • Recovery plan: Outlines the actions and steps that will be taken to restore the normal operations of the business after the disruption is resolved. Involves defining recovery objectives, performance indicators, evaluation methods and lessons learned.

How are contingency plans completed for an operational plan?

By following these steps:

• • Review the operational plan and identify the key activities, deliverables and stakeholders.

• • Conduct a risk assessment and prioritise the risks based on their probability and impact.

• • Develop a response plan and a recovery plan for each risk and document them in a contingency plan template.

• • Communicate/consult with the relevant stakeholders to gain feedback and approval.

• • Implement and monitor contingency plan and update it as needed.

When do operational plans develop contingency plans and who is typically involved?

This takes place during the planning phase of the project or business unit before the execution phase begins. It allows enough time to identify and address the potential risks and prepare for the possible scenarios. However, contingency plans should also be reviewed and revised regularly throughout the execution phase, as new risks may emerge or existing risks may change.

The development of contingency plans typically involves the following stakeholders:

• • Project or business unit manager: This is the person who is responsible for overseeing the operational plan and ensuring its success. They lead the contingency planning process and coordinate with the other stakeholders.

• • Project or business unit team: This is the group of people who are involved in carrying out the operational plan and achieving its goals. They contribute to the risk assessment, the response and recovery plan.

• • Risk manager: This is the person who is responsible for managing the risks and implementing the contingency plan. They monitor the risks and trigger the contingency plan if needed.

• • Senior management: This is the group of people who are responsible for the strategic direction and governance of the business. They approve the contingency plan and provide the necessary support and resources.

What are the key terms and descriptions that relate to contingency plans in an operational plan?

• • Risk: The possibility of something happening that could have a negative impact on the operational plan.

• • Risk appetite: The amount of risk that the business is willing to accept or tolerate in pursuit of its objectives.

• • Risk register: The document where details of each risk, such as its description, probability, impact, control and mitigation is recorded.

• • Risk matrix: A tool that helps to prioritise the risks based on probability and impact, using a scale of low, medium or high.

• • Trigger point: The event or situation that indicates that a risk has occurred or is about to occur and that the contingency plan should be activated.

• • Scenario planning: A technique that helps to explore possible outcomes and implications of different situations and to prepare for them accordingly.

Where do contingency plans align and integrate with other components of the operational plan?

• • Goals and objectives: Help to ensure that the operational plan can still achieve its desired results, even if some risks occur.

• • Strategies and actions: Support and complement the main strategies and actions of the operational plan, by providing alternative or backup options.

• • Budget and resources: Allocate and manage the budget and resources by accounting for the potential costs vs benefits of the risks.

• • Timeline and milestones: Help to adjust and update the timeline and milestones of the operational plan by considering the potential delays and disruptions caused by the risks.

Where can I go to find more information about contingency plans in an operational plan?

• • What is a contingency plan? A guide to contingency planning: This is a comprehensive guide that explains what a contingency plan is, why it is important, and how to create one.

• • What Is Contingency Planning? [+ Examples]: This is an informative article that provides examples and tips on how to do contingency planning effectively.

• • Contingency planning: 4 steps to prepare for the unexpected: This is a practical article that outlines four steps to develop a contingency plan for any situation.

Which people or positions in industry are knowledgeable about contingency plans?

• • Business continuity manager: Is the person who is responsible for ensuring that the business can continue to operate in the event of a disruption or crisis. They develop and implement the business continuity plan, which is a type of contingency plan that covers the whole business.

• • Project manager: Is responsible for planning and executing a specific project within the business. They develop and implement the project contingency plan, which is a type of contingency plan that covers a specific project.

• • Risk analyst: Is responsible for identifying and assessing the risks that could affect the business or the project. They provide input and advice to the contingency planning process and help to monitor and evaluate the risks.

What are contingency plans like in other aspects of life?

Contingency plans can be applied to various aspects of life, such as sport, family or school. For example:

• • In sport – could be having a substitute player ready in case the main player gets injured or suspended or having a different strategy or tactic in case the opponent changes their formation or style.

• • In a family – could be having an emergency fund or insurance in case of a financial crisis or a health issue or having a trusted friend or relative who can take care of the children in case of a personal challenges.

• • In school – having a backup device or internet connection in case of a technical problem or a power outage or having a study partner or tutor who can help with the assignments or exams in case of difficulty or doubt.

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The first edition of this post was generated by AI for the purpose of providing affordable education to a learner hungry world. The author has then edited, endorsed and added rich learning content.