Contingency Planning (DP IB Business Management)

Revision Note

Flashcards
Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

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

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Lisa Eades

Author: Lisa Eades

Expertise: Business Content Creator

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

Steve Vorster

Author: Steve Vorster

Expertise: Economics & Business Subject Lead

Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.