The contingency plan builds cases for alternatives. There are three types of contingency planning you must consider. The first is when your goals are not accomplished or are blocked somewhere in the execution. You must have alternatives developed to eliminate the blockage. It is a fallback position. Normally you develop several courses of action to get you to the goal. Multiple routes or alternatives permit you choices when the goal path becomes blocked. You don’t change your goals, just the actions to get you to the goals.
Another type of contingency planning is a big picture issue. This is a disaster plan for a business-created crisis that could shut down your company—for example, a labor strike in a plant that was not expected or anticipated that catches management unprepared. A contingency plan should address such occurrences. Natural disasters are a primary contingency that companies plan for. Like manmade situations, these occurrences can be predicted and planned for. What would happen to a business dependent on landline telephone communications if a flood wiped out the line? Remember the huge area of Quebec, Canada, that was paralyzed for months in the winter storm of 1998? How can you plan for those events? What is your recovery plan?
The third type of contingency plan is developed from an internal view that examines incidents that could happen to your business and that would cause significant concern. For example, what would happen if members of a key management team were all killed in a plane crash? Sad events such as this have happened before. A contingency would have to be in place to replace those critical people. This example is so real that at most companies it is standard operating procedure that teams not fly together as a precautionary measure.