Weather storms with living contingency plans
When a commodity chemical maker lost its largest feedstock pipeline to an explosion, it triggered a weeks-long shutdown that cost hundreds of millions. The board, furious, realized the company’s contingency procedures were little more than dusty binders no one consulted.
Drawing on lessons from risk management frameworks, the new CEO launched living contingency plans. Each business unit mapped its worst-case scenarios—plant failure, sudden demand collapse, currency crises—and assigned a small “rapid-response” team to each. These teams were cross-functional, including finance, operations, legal, and communications, so no one had to scramble to find expertise mid-crisis.
They held semiannual drill days where an executive randomly announced a frozen asset, and the response teams had just hours to rally a plan. These drills revealed missing steps: critical approvals that could take days, or gaps in supplier contacts. They updated the blueprints on a public portal every quarter, and allocated a 3 percent reserve budget for tactical moves.
When a flash flood threatened one of their overseas plants—an unlikely event not previously considered—the response team sprang into action. Using the drill playbook, they secured temporary production contracts with nearby plants, diverted inventory, and communicated promptly to customers—all within 48 hours, limiting the loss to a fraction of what it could have been.
Living contingency plans aren’t exotic; they’re a matter of integrating risk management into your everyday operating processes so that your business can bend without breaking.
Imagine you say to your leadership team, “Let’s pick three wild-card risks that could sink us.” Then assign each to a cross-functional squad and schedule a ‘crash day’ six months out to simulate one of them. Finally, set up a small, untouchable tactical fund—maybe 2–3 percent of your budget—on a separate ledger and review its balance weekly with your finance director. These moves embed flexibility into your everyday operations, so you can protect your strategy when surprises strike.
What You'll Achieve
You will build organizational resilience and speed of response to unexpected disruptions, reducing downtime and financial loss. Internally, you’ll enhance cross-functional collaboration and sharpen crisis-management skills. Externally, you’ll maintain stronger customer confidence and protect your market position in the face of adversity.
Build flexible backup blueprints
Identify three ‘black-swan’ risks
List major unlikely but high-impact events—e.g., supplier bankruptcy, regulatory shift, cyberattack. Reserve 15 percent of your budget and a small cross-functional team to react to whichever ‘swans’ appear.
Run twice-annual failure drills
Simulate one unexpected scenario midyear with your leadership team—freeze a critical resource or crash a system—and work through a rapid contingency, noting bottlenecks and key decision points.
Maintain a 30-day rolling ‘tactical fund’
Keep a small pool of cash or resource credits unlocked and ready to deploy within a month. Publish its balance weekly so leaders know there’s breathing room when the unplanned arrives.
Reflection Questions
- What three unlikely events could cripple your business in the next year?
- Who on your team has the authority and the know-how to mobilize your contingency plan?
- What’s one small reserve you can protect today to give your team breathing room later?
Personalization Tips
- In event planning: Have backup venues, vendors, and permits ready if your outdoor festival rains out.
- In software development: Maintain an emergency ‘bug-fix’ sprint team that can freeze in and patch critical issues within 48 hours.
- In household budgets: Keep a small emergency fund in a separate account you can reach in one-click to cover urgent repairs.
Execution: The Discipline of Getting Things Done
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