Planning For Contingency

Personal financial planning having different components like Asset planning,Insurance planning, Investment planning,Tax planning, Estate, and Retirement planning. Apart from all,there is one more planning, that is Contingency planning.In this Planning about when an emergency occurs what are the proper and immediate steps are to be taken by the management or employees.

Contingency planning has three main components – 

Protection,

Detection and

Recoverability. 

This planning plays an important role in the event of flood, fire, accident, illness or any other unexpected events. It is a plan developed when something unexpected is likely to occur or occurs at any time and may put strain on one’s life and work. 

Personal financial planning includes planning for meeting those needs or situations that are unforeseen.Contingency planning is not just about disasters, but about preparing of events, such as loss of data, supplier or other disruptive unknown events. It is therefore important for every person to prepare to make contingency planning as a part of every day plan.Often, these plans are devised by governments/businesses/organizations. They are also called ‘back-up plans’/‘worst case scenario plans’ or ‘Plan B’. It consists of if-then statements, which define solutions and deploy when the problems occur.

They are required to help governments/business/individuals to recover from serious

incidents in minimum time with minimum costs and disruption. Contingency plan

requires an investment of time and money. It is not an expensive planning. During the

times of crisis, contingency plans are often developed to explore and prepare for any

eventuality. During the cold war, many governments made contingency plans to

protect themselves and their citizens from nuclear attack.

Benefits of Contingency Planning: 

Benefits of contingency planning are

• It enhances the efficiency and aptness of responding to emergencies;

• It helps in boosting the coordination mechanisms;

• It helps teamwork;

• It reduces uncertainty and delays with respect to the unexpected events; and

• It increases the power of thinking in terms of the most possible outcomes.

On one side, contingency planning has the benefits mentioned above, and on the other side is the most important disadvantage that contingency planning is a difficult and time-consuming process.

Obstacles in Contingency Planning: 

Even though it having benefits, There are some drawbacks too in contingency planning,certain obstacles also

• As the possibility of occurrence of crisis is low, people often feel less urgency to

create a contingency plan;

• Political sensitivity plays an important role in obstructing the preparation of

contingency plan;

• Lack of required financial resources; and

• Number of competing priorities.

To be effective, contingency plan needs to be an ongoing process by reviewing and

updating regularly and making sure that all those involved in this plan are familiarized

about their roles and responsibilities.