Why Contingency Planning Is Critical to Risk Management

Why Contingency Planning Is Critical to Risk Management

Contingency planning and risk go hand-in-hand. In this post, the Lazy Leader defines countermeasures and contingencies and introduce a simple tool to assess business risk.

Contingency planning is a last resort which should be considered for high risks in when it’s not possible to prevent or avoid an event, mitigate the impact, or transfer the risk.

What’s more, we use contingency planning and risk management in project management and business continuity planning, to prepare the organization for the times when a high risk happens. This includes unplanned events or when someone fails to deliver.

A contingency plan is your plan B.

Contingency Planning and Risk

When addressing risk, you should consider both countermeasures and contingencies.

Taking active steps to reduce the possible effects of risk is not indicative of pessimism, but is a positive indication of good project management. – Robert Buttrick

Countermeasures include:

  • Prevention: what can you do to stop or avoid the threat or problem?
  • Reduction: what can you do to reduce the level of risk?
  • Transference: what can you do to transfer the risk to a third party?

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