A contingency letter includes the plans and procedures a business department will follow if something happens that might affect the company's operations either positively or negatively. The letter would explain how to respond to a fire or data loss -- or to unexpected good fortune, such as a large order. While a comprehensive contingency plan for the entire business can encompass numerous departments, a contingency letter focuses on problems that an individual department may encounter and outlines a plan for working around those problems.
Processes and Tasks
Each department supervisor should prepare a contingency letter detailing the business processes it handles and the tasks it oversees. This letter should include everything the department does, every person with whom it communicates, what deliverables it provides and when it present deliverables. For instance, the contingency letter for an accounting department must show how the accounting department communicates with the sales department to record accounts receivable and its communication methods with the purchasing department to track accounts payable, as well as how the department delivers monthly income statements and quarterly tax returns.
The contingency letter should include the failure points in each process. These are the events that can disrupt the completion of a process or task. Failure points can range from natural disasters to catastrophic data loss to simple miscommunications between co-workers. A contingency letter that outlines an accounting department's failure points can include the omission of a week's worth of sales invoices or a hard drive crash that wipes out important financial statements.
Probability and Impact
The next part of the contingency letter details the probability that the failure points could occur and the impact that such failure points would have on operations. The letter can show how some failure points have a high probability but represent minimal threat, while other failure points can be highly unlikely but deliver devastating consequences. The contingency letter for an accounting department's automated record-keeping system may show a low probability of failure to keep the company's records up to date, but the letter can also show how a failure in this system can have serious impact on the department's operations.
Contingency Action Plan
The contingency letter will contain an action plan that outlines the steps the department will take if a failure point occurs so the department can work around the failure point while accomplishing a necessary task. While the actions outlined in the contingency letter may not be the most efficient or convenient methods of completing the task, they get the job done. The action plan in the accounting department's contingency letter can include steps to use paper ledger books and calculator in the event of a data loss from a crashed hard drive.
- Maniactive: Contingency Planning -- How to Write an Effective Contingency Plan for Your Organization
- Financial Industry Regulatory Authority, Inc.: Small Introducing Firm Business Continuity Planning Template
- Bplans: How Do I Write a Contingency Plan?
- Education Portal: What Is Contingency Planning in Business? -- Definition, Example and Importance
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