Based on your business continuity threat and risk assessment,

what are the most concerning natural, technological, or

manmade potential threats to your business?
For businesses located along the San Andreas fault line in California,

it might be a major earthquake (a 19% chance in the next 30 years).

For companies in Florida,

it might be a hurricane (a 61% chance).

For those in New York City,

it could be a terrorist attack (threat levels change daily).

And for some businesses across the U.S., particularly for those in rural areas, the greatest
concern might be losing internet access for an extended period of time.

That’s where your contingency plans come in. Don’t have any? You should. Let’s take a closer
look at what contingency planning is and how it’s different than business continuity.

Business Continuity Planning Vs.

Contingency Planning
“Contingency planning” and “business continuity” are
often-confused terms. They are similar in meaning—both
are intended to enable organizations to continue
operations in the event of a crisis—but the details of both
concepts differentiate them.
What is business continuity planning?
Business continuity encompasses a range of activities that
revolve around one central question: Could you maintain
business as usual in the face of a disruption? It includes
the writing of business recovery plans—plans that
provide direction on the steps to take should a disruption
ever occur.
Intended to cover a broad range of disruptive scenarios,
recovery plans are tailored to address the impact of an
event rather than a specific event itself—for instance, not
the loss of your workplace due to a hurricane specifically,
but the loss of your workplace due to any unexpected
event.

What is contingency planning?

Contingency planning, on the other hand, addresses
survival in the face of specific types of events—those that
present the greatest threat to the survival of your
business (like hurricanes, earthquakes, terrorist attacks,
etc.). The contingency plan acts as a reference guide for
business leaders, laying out instructions to follow should
these particular events ever occur. Many city
governments, for example, have contingency plans for
events that have a higher likelihood of occurring—
anything from floods to power outages to energy
shortages. Contingency plans are written with a greater
level of detail than recovery plans (i.e., 10 things
employees should do before they evacuate the building
due to a hurricane vs. simply a general directive to
evacuate the building should the need arise), but both sets
of directives go hand-in-hand.

How do you know which contingency plans

you need?
Even if you have business continuity plans, it’s smart to
create contingency plans as well because of the high level
of risk posed by certain scenarios.
To determine the type of contingency plans you need,
start by performing a Business Impact Analysis (BIA).
The BIA identifies your organization’s most critical
business units and processes—information that will help
ensure your contingency plans support the right
components for survival.
Next, conduct a threat and risk assessment to identify
conditions or situations that may cause a business process
outage, and then determine the probability of those risks
occurring. From the threats listed, pinpoint those that
have:
 High probability of occurring and high impact on
your critical processes.
 Low probability of occurring and high impact on
your critical processes.
These are the scenarios for which you need contingency
plans. (Even if an event has a low probability of
occurring but would have a catastrophic impact should it
take place, it’s wise to create a contingency plan.) They
pose the highest-level of risk to your organization, which
is why it’s important to be well-prepared.

In this case, a contingency plan helps the firm to maintain their position and avoid the risk
of losses.

 Reduces the Risk of Uncertainty. Future is unpredictable. ...

 Continuity of Work. ...
 Increases Credit Availability. ...
 Prevents Panic

What do we mean by contingency plan?

Contingency planning is defined as a course of action designed to help an organization respond to an

event that may or may not happen. Contingency plans can also be referred to as 'Plan B' because it can
work as an alternative action if things don't go as planned

What is the purpose of a contingency plan?

“The purpose of any contingency plan is to allow an organization to return to its daily operations as
quickly as possible after an unforeseen event. The contingency plan protects resources, minimizes
customer inconvenience and identifies key staff, assigning specific responsibilities in the context of the
recovery.”

What is an example of a contingency?

Contingency means something that could happen or come up depending on other occurrences. An
example of a contingency is the unexpected need for a bandage on a hike. The definition of a
contingency is something that depends on something else in order to happen

What is the relationship between a disaster recovery plan a contingency plan and a business continuity
plan?
Business continuity focuses on keeping business operational during a disaster, while disaster recovery
focuses on restoring data access and IT infrastructure after a disaster.

Difference Between Business Continuity and Contingency Plan

Minor and major disruptions must be avoided at all costs for business survival. Most events that
can cripple business operations are non-predictable including terrorist attacks, cyber-attacks and
natural disasters including floods, earthquakes and fires. These cost businesses money, time,
customer loyalty and market share. Since no one can predict future events and the ability of
businesses to resume normal business functions, companies must hence put in place measures to
ensure that businesses continue running even after these unfortunate events occur. Among these
measures include business continuity plans and contingency plans.
What is Business Continuity?
This is the ability of businesses to carry out their normal activities and function after unplanned
events have occurred. These events could be a pandemic, a business crisis, natural disasters or
even workplace violence. Businesses should not only plan and prepare for major disruptions that
will completely affect business operations but also events that could adversely affect functions
and services.

A business continuity plan may entail but is not limited to:

 The team that will manage emergency events

 Measures to ensure services and customers are availed to customers
 Employee support measures
 Technological measures to restore business functions
 Where to relocate people and processes in case business locations cannot be used
 Measures to ensure staffing levels are adequate in the case of an unprecedented event

Among events that a business continuity plan will guard against include;

 Natural and local disasters- These include fires, electronic malfunction, earthquakes and
floods
 Network disruptions- This is important for businesses that need a reliable connectivity to
operate
 Cybersecurity- Due to the rise of cybersecurity threats, businesses should ensure all data
is backed up
 Human error- Outages can be caused as a result of innocent mistakes and ignorance, and
should be mitigated

What is Contingency Plan?

A contingency refers to activities or events that occur beyond the normal range of organizational
operations. A contingency plan can, therefore, be defined as an actionable and defined plan that
will be enacted if an identified business risk or unfortunate event occurs. Contingency plans are
part of risk management and can be created for identified or non-identified risks. It can also be
created to take advantage of strategic opportunities.
A contingency plan is not only a need for large businesses as small to medium businesses can
also be crippled by unforeseen events. They can also be tailored to specific departments. For
instance, the need to protect, restore and use data in an organization may require an information
services department contingency plan.

Importance of contingency plans

 Allow organizations to resume normal business functions as fast as possible after an

unforeseen event has occurred
 Minimizes consumer inconveniences
 Identification of staffing needs in the context of recovery

A good contingency plan should include;

 Natural disasters such as earthquakes, fires and hurricanes

 Crisis including worksite injuries and accidents
 Personnel such as strikes and employees deaths
 Data loss
 Product issues such as plan relocations
 Mismanagement such as accidental destruction and theft

The process of developing a contingency plan involves the identification of essential business
operations and sectors and determining how these processes can be affected by the occurrence of
unforeseen events. Actions that would be needed to return these to normal operations should be
identified and documented, including the resources that would be needed for this. A good
contingency plan incorporates each functional area in an organization

Similarities between Business Continuity and Contingency

plan
 Both entail enforcing measures for businesses to operate even after
unprecedented events have occurred
Differences between Business Continuity and Contingency
plan
Definition

Business continuity refers to the ability of businesses to carry out their normal activities and
function after unplanned events have occurred. On the other hand, a contingency plan refers to
an actionable and defined plan that will be enacted if an identified business risk or unfortunate
event occurs.
Summary of Business Continuity vs. Contingency Plan
Business continuity refers to the ability of businesses to carry out their normal activities and
function after unplanned events have occurred. It is based on the concept of business survival
after the occurrence of unprecedented events. On the other hand, a contingency plan refers to an
actionable and defined plan that will be enacted if an identified business risk or unfortunate event
occurs. It is based on the concept of preparation of all types of disruptions and steps that should
be followed when these disruptions occur.