November 20, 2006 - Risk Management Bonus: Contingency Planning

Most risks never actually become issues. We face hundreds every day without panicking. Every time I merge into traffic from the 605 to the 405 near Seal Beach I run the risk of getting stuck in traffic for hours. Actively managing my daily commute involves checking the news or Internet before leaving and listening to the traffic reports en route. If I wait until traffic stops in front of me I may be a mile from the next exit. But sometimes my best efforts fail and I need the fall back plan.

Contingency Planning. Contingency plans are preplanned actions that can be taken when a risk meets a trigger point that identifies it as an issue. By predefining the steps to be taken there is no need to panic. People know what to do when the manager tells them what has happened.

The trap some organizations fall into is relying heavily on their contingency plans instead of actively managing their risks. By waiting until the risk becomes an issue to take action on it, projects spend more time and effort dealing with the problem.

The key is to plan for the worst but work for the best.