Business Contingency
Planning
Presentation By:
Sheldon E. Spackman
What Will Be Covered
• Business Contingency Planning a
Definition
• How B.C.P. Can Be Applied
• Tools To Make It Work
• A Real World Example
• Sit Down and Try It
• Summary
• Readings List
Business Contingency
Planning A Definition
A Proactive Executive Command
Crisis Management Program,
Driven By Business
Requirements, To Control Any
Significant Impact, Either
Positive Or Negative, On An
Organization.
Contingency Planning
Can Be Applied To:
•
•
•
•
•
•
•
•
•
Disasters
Competition
Missed Forecasts
Recovery
Critical Vendors loss (Sole Sourcing)
New Products
A Critical Customer Loss
Computer Failure/Data Loss
Significant Events
Applying Contingency
Planning
•
•
•
•
Leadership
Preplan
No Plan = Decision Flurry
Can’t Plan For Everything
What Events Should Contingency
Planning Be Confined To?
Events That:
• Cannot be foreseen
• Cannot be supported
• Are beyond reasonable control
• Exert a significant impact
• Are based on major assumptions
that prove invalid
Tools To Make It Work
• Fast Feedback Fast Response
• ZZB Principles
• Best, Worst, and Most Likely
Cases
• Steps in Contingency Planning
Where to Start
•
•
•
•
•
Upper management commitment
Company resources committed
Communication
Review
Feedback
Types Of Feedback
• Competitive Intelligence
• Customer Research
• External Environmental
Scanning
• Monitoring Major Business
Assumptions
• Financial Analysis
Zero Based Budgeting
and Planning
• Budget Planning
• 90%, 100%, 110%
• Reactions Pre-planned
Best Worst Or Most
Likely
• List and define all variables
• Best assumption
• Most likely assumption
• Least likely assumption
Steps of Contingency
Planning
1.
2.
3.
4.
5.
6.
7.
8.
Identify
Estimate
Formulate
Develop Plans
Establish Feedback Mechanism
Develop Schedule of Resources
Pro-forma Financials
Designate people
Possible Internal
Significant Events
•
•
•
•
•
•
•
Replacing a Competitor
Overly Optimistic Sales Forecast
Sales of New Products
Disasters
Technological/Product Obsolescence
Major Assumptions (In company plan)
Contingency Reserves ($$$$$$$$$$)
External Primary and
Secondary Influences
Wilson Churchill Stated
“Plans are useless, but
planning is useful.”
Hints For Getting
Started
• Don’t Start Large
• Make a universal (non specific)
plan
• Identify alternatives
• Make plan flexible
A Real World Example
Simmons and Clark Jewelers
Detroit, MI
Detroit and NYC
Blackout
Simons and Clark
Jewelers
Employee’s Followed Established
Store Security Plan
1. Closed all external gates
2. Locked all doors
3. Took care of all customers
4. Put away merchandise
Sit Down And Try It
Let’s Plan a trip to drive to the
store.
What could go wrong?
(Confine Events)
Assign Probability
• Red = High Probability
• Yellow = Middle Probability
• Green = Low Probability
Trip To The Store
•
•
•
•
•
Major Assumptions?
Action Plan?
Monitoring?
Resources?
Person doing it?
Contingency Planning
Summary
•
•
•
•
•
•
•
Starts With Good Leadership
Needs Resources
Will Not Be 100% On Target
Must Be Adaptable
Start Small
Use Tools To Guide Process
Must Be Reviewed
Readings List
• Herriott, Larry CDRP.(1997). “Business
Contingency Planning Is…” Disaster
Recovery Journal. ©Systems Support, Inc.
Retrieved, October 5, 2003, From,
http://www.drj.com/newdr/w3_006.htm
• McConkey, Dale D. “Planning for
Uncertainty”, Business Horizons, Jan/Fed
1987. vol. 30, Issue 1, pgs 40-45.
Readings List
• “Business Continuity/Disaster Recovery
Lessons Learned from 9/11/01 – A Panel
Discussion”. Retrieved October 5, 2003,
from
http://www.drj.com/groups/mcpf/0802minut
es.html
• Green, Barbara. “Emergency Plans and
Employees’ Team Spirit Make Blackout
Minor Inconvenience for Retailers”, From
National Jeweler, 00279544, 9/16/2003, Vol.
97, Issue 18
Readings List
• Westhoven, Sgt. 1st Class Kryn, “Medal
Awarded to Retired Army Reservist Who
Died in WTC”. Retrieved, 10/05/2003 from.
http://.army.mil/usar/news/2002/06june/resc
orla.html
• Kite, Shane. “Blackout Inspires CuttingEdge BCP Innovation”. Securities Industry
News, Volume XV, Number 36, Monday,
September 15,2003
Readings List
• Sapriel, Caroline. “The People Dimension of
a crisis”. Strategic Communication
Management, Apr/May2002, Vol. 6 Issue 3,
p6
• Sapriel, Caroline,. “Effective crisis
management: Tools and best practice for
the new millennium”, From Journal of
Communication Management, February 17,
2003 Vol.7,4 pgs.348-355. Henry Stewart
Publications
Readings List
• Cholbi, Wendy. “Contingency Planning:
What Every Director Should Know” Bank
Director, 1st Quarter 2002, pgs. 36-46