What Is Contingency Management in a Business?
Many factors distinguish successful businesses from average and unsuccessful ones, but a key factor that repeatedly shows up in research is planning. The frequency that managers review their performance against their plans, in addition to the quality of the plans, counts the most. Therefore, it is important for all organizations, especially small businesses, to have the ability to respond swiftly to major events that might have a direct impact on a company’s long-term goals.
Contingency management is a management approach based on the belief that if you want to operate your business effectively in the long run, you must be fully prepared for emergency events or disruptions. To persevere against all odds, ensuring that your essential business functions continue despite any situation that may emerge is critical. For this purpose, you can use risk-assessment procedures to identify dangers and vulnerabilities, and devise measures to prevent accidents and limit their impact.
Contingency management is a relatively young field, but after major disastrous events such as Category 5 hurricanes and the bombing of the twin towers in New York, organizations are making a move to adopt this approach while taking into account vulnerabilities to natural and manmade disasters. Also, in the face of growing global legislation and the expansion of the global market, companies must institute proper planning to ensure that they protect their information and maintain business continuity. It is the logical first step for you to help mitigate business risk and minimize potential losses.
Key components of contingency management are business continuity planning and disaster-recovery programs. Business continuity planning is planning and implementing prevention activities and preparing for anticipated risks. Disaster-recovery programs involve procedures that are related to preparing for recovery or continuation of business operations after a disaster occurs. It is a subdivision of business continuity planning. Crucial components of effective contingency management include data security, well-prepared backup sites, access to those backups after a disaster and preselected personnel to deliver critical services.
The rising levels of risks increasingly challenge businesses around the world. The increasing reliance of businesses on technology, along with the increased exposure to the risk of natural and purposeful disaster, means that businesses are more likely to suffer from significant adverse events. Aproper and effective contingency management approach, therefore, is necessary for survival. Adopting a contingency management approach can be effective in reducing disruption.