Contingency Planning Vs. Crisis Management

Contingency planning and crisis management are two elements of a business continuity strategy that enables a company to recover from a disaster, such as fire, flood, computer or network failure and data loss. Companies that operate either contingency planning or crisis management as stand-alone strategies run the risk of an incomplete recovery from disaster that could have serious consequences for the business.

Contingency planning is the process of identifying potential risks to the business and developing a comprehensive plan that enables the company to respond to any threat or disaster and quickly restore normal business operations. Contingency planning is a proactive strategy that emphasizes preparation over response. Crisis management is the process of managing the response to a major incident after it has occurred. It is a reactive strategy that emphasizes response over preparation.

A contingency plan identifies and prioritizes the resources that are critical to the continuity and survival of a business. Critical resources include IT and telephone systems, manufacturing plants and warehouses, and employees. The contingency plan identifies potential threats to any of the critical resources and sets out a documented action plan to respond to any disaster scenario. The plan also nominates a team of key individuals with responsibility for different aspects of the response, including communications, resource allocation and overall management. Companies rehearse their contingency plan regularly and update the plan to take account of any changing threats.

Companies move into crisis management mode when a serious problem occurs. A team takes responsibility for assessing the problem, preparing and implementing a recovery strategy and communicating with employees, media, customers and shareholders to explain the plan and reassure them of the company’s ability to recover. Depending on the scale and nature of the problem, the team may have to locate temporary buildings and IT facilities for key employees so they can continue working. The aim is to restore normal work environment as quickly as possible and limit any consequential damage.

Integrating contingency planning and crisis management ensures that a company is fully prepared for any risk and can put a prepared response program into action. Timing is critical because any delay can have serious consequences for the company. Delays in fulfilling orders can impact customers’ confidence or lead to loss of business. Prolonged stoppages can have a damaging effect on a company’s reputation.