What is a contingency plan and what are the steps to create one?

Highlights

• What a contingency plan is and why it has become a key tool for business continuity.
• The most common risks companies face today and how to start identifying them.
• The essential steps to create an effective contingency plan tailored to any type of business.
• Practical examples showing how to prepare for technological, operational, or reputational crises.
   

In a world where unexpected events can impact any business, having a contingency plan is more than a good idea: it is a way to ensure your company’s continuity and protect what you have built with effort.

“A contingency plan is the art of preparing before a crisis occurs, so you can respond quickly and clearly when the situation demands it.” María Abraín, Legal & Procurement at Lexington

What is a business contingency plan?

A business contingency plan is a strategic document that defines what could go wrong in a business and how to respond when it happens. It’s not something only large corporations should have: any business can benefit from anticipating threats and designing effective responses.

In simple terms, it’s about thinking ahead about potential problems, organizing who does what if they occur, and detailing the steps that will allow your business to recover from unexpected disruptions without losing direction.

Why do you need a contingency plan for your business?

Current data makes it clear:

According to a WifiTalents business continuity report, 40% of companies that experience a major disruption never fully recover if they do not have a plan in place. The same report shows that 70% of companies without a tested plan face longer and more costly downtime.

These numbers are more than statistics—they represent lost sales, dissatisfied customers, and reputational risk. In a competitive environment, being prepared can mean the difference between moving forward or having to close doors.

Steps to develop a contingency plan

Creating a contingency plan may sound complex, but if we break it down step by step, it becomes structured and applicable to any business.

Identify risks

Before you can plan how to respond, you need to know what could go wrong. This includes internal risks (such as technical failures or loss of key personnel) and external risks (cyberattacks, economic crises, natural events).

Risk assessment

Not all risks are equal. Evaluate their likelihood and potential impact on your business. This will help you decide where to focus your resources and efforts first.

Prioritize the most critical risks

Rank risks according to severity. Those that could paralyze operations should have clear and detailed strategies as soon as possible.

Develop response strategies

Design concrete measures to address each risk: procedures, necessary resources, roles, and timelines. Think of it as an “emergency manual” your team can follow when things get complicated.

Executive approval and support

A plan is not effective without top-level backing. For it to work, it must have formal support from management and be integrated into the organizational culture.

Effective communication

Define how plan actions will be communicated: who informs whom, how updates are shared with the team, and how clients or suppliers are informed if necessary.

Testing and periodic reevaluation

A plan is not a static document. According to the previously mentioned report, 74% of companies that test their plan annually find opportunities for improvement.

Examples of contingency plans

Contingency plans can take many forms depending on the sector or size of the company. Common examples include:

• Cyberattack contingency plan, with protocols to isolate systems, restore data, and communicate with clients.
• Supply disruption plan, with alternative suppliers and logistical strategies.
• Natural disaster plan, including evacuation, data backup, and operational continuity.
• Reputation or communications crisis plan, to respond quickly and consistently to negative news.

The key is for each plan to have clear objectives, defined responsibilities, and actionable steps when needed.

Key takeaways

A contingency plan is not something to simply “file and forget”. It is a dynamic tool that should evolve with your company and the context in which it operates. Integrating it into daily management, testing it, and reviewing it periodically can make a big difference when unexpected events occur.

More and more companies are incorporating this type of planning into their routine work, reserving quiet spaces to analyze scenarios, make decisions, and coordinate teams. Having well-equipped rooms facilitates these strategic processes, especially when focus, confidentiality, and collaboration are required. At Lexington we offer meeting rooms in Madrid and Barcelona designed precisely to support these types of professional activities.

Spending time today anticipating risks can make a difference tomorrow. Book your room today in just a few clicks!