Business Strategy: Contingency Planning

Question 1

Risk management:

Answer 1

Identifying and dealing with risks threatening a business

Question 2

Contingency planning:

Answer 2

Planning for unforeseen events

Question 3

Crisis management:

Answer 3

Handling potentially dangerous events for business

Question 4

What is risk in business?

Answer 4

• Possibility of loss or business damage
• Threat that may present or hinder ability to achieve business objectives
• Chance that a hoped-for outcome will not occur (e.g. new product launch)

Question 5

Different ways businesses deal with risk:

Answer 5

• Ignore it (wait and see)
• Reduce probability of risk
• Share or deflect risk (e.g. insurance)
• Make contingency plans - prepare for it
• Treat risk as opportunity - particularly if also affects other competitors

Question 6

Contingency Planning is part of risk management:

Answer 6

• Identifying what and how things can and might go wrong
• Understanding potential effects if things go wrong
• Devising plans to cope with threats
• Putting in place strategies to deal with risks before happen

Question 7

Contingency Planning involves:

Answer 7

• Preparing for predictable and quantifiable problems

- Preparing for unexpected and unwelcome events

Question 8

Aim for Contingency Planning:

Answer 8

Minimise impact of foreseeable event and to plan for how business will resume normal operations after crisis

Question 9

Evaluating the need for Contingency Planning:

Answer 9

• Risks vary in terms of their significance to business, likelihood
• Not required for every eventuality
• However, risks of strategic significance cannot be ignored