How do you write a contingency plan?


Quick Answer

To write a contingency plan, make a list of the things that could go wrong in your business, from payroll problems to economic recessions. Rank the list in order of priority, starting with the most likely scenarios. For each potential scenario, write an action plan to guide employees. Identify ways to reduce the risk of each scenario. Where risk reduction is not possible, as in the case of natural disasters, find ways to mitigate the impact on the company.

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Full Answer

The content of a contingency plan varies by company. When identifying risks, start with the assumptions you make in the business plan, including vendors continuing to offer credit and timely delivery, demand continuing to stay strong and key employees remaining alive, for example.

When writing a contingency plan for each scenario, work with each team to determine the most effective response. Start with the actions that must happen in the first hour after a problem occurs, and move on to the first day, week and month. For scenarios that come on gradually, such as recessions, use specific milestones, such as interest rates or sales numbers dropping below a certain threshold, to trigger actions. Each plan should address key business functions, such as issuing credit, hiring and firing workers and managing inventory. The contingency plan should also designate tasks to specific people or positions to eliminate confusion.

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