210
See also: Managing risk 40–41 ■ Learning from failure 164–65 ■ Avoiding
complacency 194–201 ■ Scenario planning 211 ■ Coping with chaos 220–21I
n business, things rarely go as
planned. Companies have to
prepare for sudden changes to
markets or the environment to
ensure that day-to-day business can
continue “when all hell breaks loose,”
as US professor Randy Pausch put it.
Contingency planning sets a
course of action to deal with a crisis,
whether this is industrial (such
as the financial collapse of a key
supplier), human, natural, or technical
in nature. It requires identifying
possible disasters, assessing
the likelihood of occurrence, and
developing a course of action to
minimize the impact. Having a
plan enables a company to manage
the crisis and recover quickly.Identify key tasks
A contingency plan has to be based
on critical business activities.
A utility company that relies on
a call-center team to manage
customer inquiries should identify
alternative premises in case of
flood. A marketing company
planning for the same incident may
need to allow staff to work remotely.In 2011, a devastating earthquake
struck Japan’s east coast, followed
minutes later by a large tsunami.
The Japanese government’s
contingency plans for earthquakes—
from earthquake-resistant buildings
to an early-warning system and
rapid-response coordination—saved
countless lives. Many companies,
such as NEC, were able to restore
operations within minutes thanks
to their prepared emergency plans.
Even natural disasters as large as
earthquakes can be managed with
good contingency planning. ■T O B E A N O P T I M I S T ...
H A V E A C O N T I N G E N C Y
P L A N F O R W H E N A L L
H E L L B R E A K S L O O S E
CONTINGENCY PLANNING
IN CONTEXT
FOCUS
Operational riskKEY DATES
1947–1991 Governments
and multinational businesses
develop contingency plans
for potential nuclear attack
during the Cold War.Late 1990s Countries around
the world put contingency
plans in place for the Y2K
or “millennium bug”—an
anticipated computer failure
due to the millennial date
change (from 1999 to 2000).2010 A lack of contingency
planning leads to closure of
northern European air space
for the first time, following the
eruption of a volcano in Iceland.
Businesses lose revenue due to
the transportation restrictions.2012 Due to the ongoing
financial crisis, businesses
around the world draw up
contingency plans for the
breakup of the Eurozone.He who fails to plan
is planning to fail.
Winston Churchill
UK former Prime Minister (1874 –1965)