Don’t Let Disaster Strike: The Importance of Contingency Planning
In 1998, Pixar faced a catastrophic event that could have changed the course of their history. An employee accidentally deleted 90% of the files for Toy Story 2, including all the work done on the film up to that point. Fortunately, they had a backup system in place, but it wasn’t tested regularly, and they were lucky to have a remote employee who had downloaded the entire file tree.
What is a Contingency Plan?
A contingency plan is a set of procedures designed to mitigate the impact of an unexpected event or disaster. It’s a “plan B” that helps organizations respond quickly and effectively to minimize damage and get back on track.
Creating a Contingency Plan
To create a solid contingency plan, follow these steps:
- Identify Your Scenarios and Risks: Gather a team and brainstorm potential risks and scenarios that could affect your organization, such as natural disasters, economic downturns, or technological failures.
- Prioritize the Most Likely and/or Highest Impact: Use a matrix to prioritize risks based on their likelihood and potential impact.
- Create the Contingency Plan Itself: Answer key questions, such as who will act, what response will be enacted, when, and where.
- Share and Test Your Plan: Share the plan with relevant stakeholders and test it regularly to ensure its effectiveness.
The Benefits of a Contingency Plan
Apple is a prime example of a company that has successfully implemented contingency planning into their sourcing strategy. By having multiple suppliers across different geographies, they can quickly pivot in case of a disaster or interruption.
Why You Need a Contingency Plan
According to a 2023 study, 61% of customers will walk away from doing business with a brand they love after one bad experience. A contingency plan can help minimize the impact of service interruptions and get your business back on track quickly.
Start Today!
Gather a small group of people and start creating your contingency plan by:
- Identifying your scenarios and risks
- Prioritizing the most likely and/or highest impact
- Creating the contingency plan itself
- Sharing and testing your plan
Don’t wait until disaster strikes. Start building your contingency plan today!