The well prepared business has a contingency plan that covers as many possible disruptions as possible. Once such a list has been made, the next part of contingency planning is to prioritize from most likely to least likely, so that resources can be allocated accordingly.Most people would put power outage on the list straight away, but prioritizing involves asking the questions anyway: How badly would a power outage really impact the company?
If your company was, for example, providing a telephone helpdesk service, since telephones operate on a different power system, it may be possible to keep working and hence not as important an emergency than a company providing fresh food that may spoil in hours if the refrigeration or cookers stop working.Thus, the best planning does indeed take into account the obvious dangers, such as power outage, but still assesses how deeply such an event may affect it; for some companies power outage may be serious enough a danger to consider specific contingencies, such as a backup generator. For others, it may consider the loss of productivity less of a threat than the costs involved with fitting uninterruptable power supplies to its computers or installing a backup generator.
The law relating to a company must also be taken into account. Providing certain services imposes legal requirements for contingency and redundancy safety systems, and this raises the priority of these scenarios on the list, since government inspection of contingency planning can take place at any time – often with little, if any, notice.
So once a full list has been drawn up, it can be prioritized. Since a responsible company will have already allocated a budget to deal with contingency, prioritizing makes it much easier to decide what percentage of the budget needs to be allocated to each item. There can often be many solutions to each problem, with varying costs and varying levels of protection, and although there is little point in spending too much on each problem, equally there is little point on spending not enough, since doing so may not procure a solution which, when the worst happens, turns out to be sufficient to deal with the crisis.
Since the entire point of contingency planning is to continue to be able to operate the business throughout potential crises, there should always be sufficient budget to handle solutions; if the solutions are inadequate, there is no point in having them in the first place, since an inadequate solution will lead to the business grinding to a halt, avoidance of which is the entire point of a contingency plan.
Even so, it is still important to ensure that budget is allocated and spent responsibly. Dividing the list into three levels of danger – critical, serious and annoyance – can help. Critical dangers will stop business dead, within minutes. Serious dangers will require an immediate response and may require some form of third party backup for which the costs need to be assessed, but will only lead to business being brought to a standstill if such responses are not initiated. Annoyances impact the productivity and ability of the company to operate at normal levels, but do not cause business to halt altogether.
When it comes to budgeting, the responsible company allocates its resources in such a way that it can cross as many critical dangers off the list as possible, as well as minimizing – if not totally eliminating – the impact of serious dangers. Often annoyances have to be tolerated, since the costs involved in eliminating those would be more expensive than tolerating the loss of productivity or profit, but even in those cases re-allocation of manpower or a re-alignment of direction can provide an effective response to such annoyances.
So this stage of the planning is complete when the full list of dangers has been categorized and a budget has been set to cover each category. At this stage in the planning the budget is not totally fixed, as this should not be done until the costs imposed by third parties have been assessed – which is the next stage in contingency planning – and thus, it should still be possible to alter the level of budget given to one category at the expense of the others. The budget for each category will dictate what can be purchased or leased to deal with threats from that category.
With list and budget in hand, the manager overseeing contingency plans will now be in a position to proceed in contacting third parties and negotiating solutions. Third party providers and suppliers who are aware that they are competing for a budgeted amount with little flexibility are more likely to lower their prices to be competitive since it is an assured contract. Somebody will be getting the job and it might be them. The prepared manager will at this stage be ready to bargain, and bargain hard, to get the contingency facilities in place.