IBBusinessDPBusiness ManagementHLRevision Notes5. Operations Management5.7 Crisis Management & Contingency PlanningContingency Planning

Contingency Planning (DP IB Business Management)

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Lisa Eades

Expertise

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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

Exam 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

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.