A risk contingency plan is a course of action that is put in place to mitigate the negative consequences of a risk event if it were to occur. While it does not eliminate the possibility of the risk occurring, it does help to minimize the impact and damage that the risk could cause. The following are common types of risk contingency.
Budget
Contingency budget set aside to manage the impact of risks. For example, a construction project that includes cost contingency in its budget to handle the risk of construction delays.
Schedule
Including contingency time in schedules to handle likely delays.
Human Resources
Preparing teams to continue without key resources with techniques such as training, knowledge transfer, resource planning and scheduling. For example, a factory that ensures that at least 3 people on every shift know how to operate a critical machine such that production can continue when someone calls in sick.
Locations
Preparing a work area for disaster recovery as a hot or cold site.
Equipment
Maintaining idle or underutilized equipment that can be used in the event of equipment failure.
Inventory
Stocking ample inventory. For example, a restaurant that manages the risk of a late food delivery by slightly overstocking.
Procedures
Establishing processes and procedures to handle risks when they occur. For example, developing a plan for managing an information security incident.
Training
Training employees to deal with situations that might occur. For example, a theme park that trains employees how to deal with a major earthquake such as equipment that needs to be shut off and instructions to be provided to customers.
Capabilities
Developing capabilities that can be used when a risk occurs. For example, a theme park with first aid services and a program of first aid training for staff.