Contingency Planning - planning for ‘what will happen if things go wrong?’ This means that an agreed course of action is in place and is ready to be used if necessary.

‘Firefighting’ - where a manager spends time and other resources trying to fix unforeseen problems and emergencies. With appropriate contingency planning this rot of situation can be avoided.

What each department plans for:

Finance:

• Sales being far below expectations
• Damaged or stolen goods causing loss of revenue

Human Resources:

• Key employees leaving
• Key employees being absent for a long time

Operations Management:

• A supplier failing to deliver on time
• Delivering wrong quantity of resources needed
• Wrong quality of resources needed
• Accidently producing the wrong product due to human error

Marketing:

• An economic downturn
• Emergence of strong competitor
• One of the businesses distributors going bust
• Reputation tarnishing event

Other issues:

• A fire/flood or some other natural disaster
• An employee or customer suing the business
• A complete ICT failure
• A pressure group accusing the business of behaving unethically

How will stakeholders be affected due to a lack of planning:

• Employees might lose their job due to random events
• Suppliers will receive fewer orders and suffer a drop in revenue
• Customers will be let down if they cannot purchase a product they want
• Local community will experience a loss of jobs
• The government will lose tax revenue from the company

Crisis Management - is the process by which an organisation deals with potentially damaging events very quickly after it has occured.

Examples of solutions:

• Ensuring the insurance policies are up to date and there is adequate cover
• Keeping a ‘cushion’ of cash
• Private health care for key employees
• Establishing data monitoring systems to try and spot crises coming
• Having ‘trial runs’ for example fire drills