Contingency Planning (DP IB Business Management)

Revision Note

Written by: Lisa Eades

The Impact of Contingency Planning

Ongoing contingency planning is a proactive process where a set of procedures to be followed if specific events or situations occur is developed
- Regular risk assessments of potential disruptions and their impacts are carried out
- Procedures commonly cover risks such as fire or weather-related emergencies
  - Evacuation plans are communicated and practised regularly
  - Key staff are given emergency responsibilities
  - Alarm systems are tested
  - Preventative measures protect stock and equipment - for example, the installation of fireproof doors
Contingency planning can help a business to survive and recover from a period of crisis
However drawing up detailed contingency plans requires time and investment

Evaluating Contingency Planning

Factor	Benefits	Limitations
Time	Helps businesses to respond immediately Clear staff roles & responsibilities Resources are identified and available Procedures are shared in advance	A time-consuming process Risk assessment takes valuable management time Plans need to be revisited regularly Staff require training
Cost	Can reduce costs Emergency equipment/resources are purchased in advance Financial losses are likely to be lower	Spending on resources needed in a crisis may be wasted if not needed Difficult to budget for unknown crisis situations
Safety	Procedures keep stakeholders such as staff and customers safe Training increases awareness Legal obligations should be met (e.g. fire regulations)	Bureaucratic and difficult to implement swiftly Leadership and compliance from staff or other stakeholders is needed
Risk	Most likely threats are considered in detail Reduces legal risks if procedures are followed	Requires up to date and complete information to be effective Human reactions such as fear and panic cannot be fully mitigated

Examiner Tip

Despite the drawbacks, it is difficult to argue that businesses shouldn't engage in contingency planning to some extent

At the very least evacuation plans and some structures to allow for business continuity in case of, for example, poor weather can be put in place with relative ease

Last updated: 29 October 2024

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