The importance of a robust contingency plan - even when nothing is going wrong

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We all know the importance of having a bit of a back-up plan for when things go wrong. And in my experience, there have been many times where a “plan B” has been a lifesaver.

One obvious example is my car. I cover lots of miles and it’s important that I’m mobile for my job. So, a key part of my selection process when choosing a new car is that I have a plan for if and when I get a puncture. This means:

• I ensure I get a car with a spare wheel and tools
• I have cover through a national breakdown company
• I carry water and a phone with me so I can contact people and await assistance.

That being said, I rarely benefit from any of the above. In fact, it would be seen as a bit of an inconvenience to carry a tyre around and pay the expense of a breakdown recovery service – but I still do, just in case.

In my “working world”, every day brings me into contact with a variety of businesses all over the UK, connecting with manufacturing, property, and technology companies most of all.

And the differences between these sectors and their contingency planning can be huge.

Many businesses will have a form of plan for when the unexpected occurs but, when pressed, they aren’t forthcoming with what it is, or even have a paper document to back this up. Some businesses even suggest that they have this “plan B” in their head and will “know what to do”. However, when things go wrong, senior leadership personnel are often tied up in the actual crises management in the moment. What does this mean? Without a formalised plan, recovery is slower and more improvised (aka flying by the seat of their pants). My take on this is that a written plan, delegated management and actions, and agreed practice are all key to ensuring the best outcomes are achieved and losses are mitigated.

Here’s a thought. Imagine: I have the tools and a spare wheel if I needed to change my tyre – which is great, I’m all set – and inevitably I suffer a puncture at the worst possible time. But, I have no idea how to use the tools, where they’re kept in my car, or the process of actually changing a wheel. Plus, it is dark, cold, and raining, and conditions are difficult for changing the wheel. I’d look back on this awful night wishing that I’d at least practiced and that I’d been carrying a raincoat and a decent torch. Better still, if I could simply reach out to my roadside recovery in that dangerous spot, I might even skip the challenge altogether and opt for some professional assistance.

Business continuity planning is much the same. When things do go wrong, they can escalate quickly, attention can become divided, and – without structure and the rigour of a practiced continuity plan – it can be exponentially more difficult to crisis manage.

And this is why insurers spend so much time looking at continuity plans. It’s a good indication that a business is risk-aware, can manage a risk event, and have excellent risk-management practices in place.

Being ready to tackle a loss when it occurs will inevitably minimise the impact and reduce the overall cost of the claim. And reducing the cost of claims and potential future cost of claims ultimately results in cheaper premiums, better terms, and better claims outcomes. For larger businesses or those particularly in the spotlight, it would also mean that the PR management of any negative situation is much easier to handle. Ultimately, the end goal is that the customer doesn’t suffer due to claims.

To put this into perspective, we see data breaches regularly in our non-working lives. Most of us use online banking, have social media profiles, and buy from online retailers, so we’re all “data subjects” and face regular exposure to breaches, potential scams, and cybercrime.  So, if one of the businesses you use has a data breach, you probably won’t judge them purely on being the victim of a breach, but rather by the risk management they have in place, security levels, how they reacted to discovering the breach, and how they dealt with it.

It’s likely that most of us would not have a good opinion of businesses that don’t have a rigorous and tested plan about what to do when things go wrong. So why would an insurer act any differently?

If you need help with business continuity planning or risk management, speak to us – we have a dedicated team who can help make sure your business is resilient.