Since business plans can never foresee all eventualities, good planning provides for contingencies to address unexpected events. In marketing plans, projections for sales, revenue and market reaction to initiatives depend on factors outside the control of the company making the plans. As a result, plans have to include provisions for action when the projected results don't materialize. Planning for contingencies includes an evaluation of possible variations in basic assumptions and the effects on the marketing plan. Contingency planning has to address problems resulting from such deviations.
Business continuity planning
Business Continuity Planning (BCP) Definition
A contingency plan is a plan devised for an outcome other than in the usual expected plan. It is often used for risk management for an exceptional risk that, though unlikely, would have catastrophic consequences. Contingency plans are often devised by governments or businesses. For example, suppose many employees of a company are traveling together on an aircraft which crashes, killing all aboard. The company could be severely strained or even ruined by such a loss.
6 Critical Business Risks in a Business Plan
Business owners prepare contingency plans because they recognize that it is difficult to accurately predict the future. During planning, companies make difficult decisions about how to allocate their resources, which include capital, personnel and productive capacity. These decisions are based on assumptions about the business environment the company will face in the next year and beyond. Many times this environment changes after the plans are implemented.
The disruption to their computer systems impacted city services including police and court records, parking, and utilities. Workers were forced to complete paperwork by hand. The City of Atlanta was caught off guard, with out-of-date software and a number of other IT vulnerabilities. A story about a German telecom business , however, shows what happens when a plan goes right.