Risk response planning is the process of developing various options, strategies and actions to enhance or exploit opportunities and to reduce or eliminate threats to project objectives. A part of this is contingency planning which is also known as a worst-case scenario planning, backup planning, fallback planning or, in some cases, a disaster recovery plan. The contingency plan is simply a secondary or alternative course of action that can be implemented in the event that the primary approach fails to function as it should. Plans of this type allow projects to quickly adapt to changing circumstances with very little inconvenience or loss.
For risks with potentially major impacts, it may be advisable to develop fallback plans, ready for implementation if the planned responses fail and the risk occurs. This is similar to preparing disaster recovery plans or business continuity plans. A fallback plan should be fully defined, planned, costed and resourced. It should also have defined trigger conditions (to understand when it should be implemented), which determine when the risk has occurred and therefore when the fallback plan is to be implemented. The aim of a fallback plan is to minimise the impact of the risk, to prevent knock-on effects into other areas of the project, and to restore control.
Remember that fallback or contingency planning will be done for risks that need it. Put it another way, if these risks occur they will have a major impact on project success. If a fallback plan is necessary, the following are some simple steps in setting on up:
- Risk Analysis – The first step in drafting a fallback plan is conducting a thorough risk analysis of your project. List all the possible risks that can threaten project success and evaluate how critical they are to success and how imminent they are in transpiring.
- Establish the Budget – Once the critical risks are organized and separated from the others, then ask ‘what can we do to suppress them’. Pay attention to what it will cost to perform this plan. Such plan may seem great on paper but the reality is that they are costly to perform and may invariably alter the course of the project.
- Develop the Plan – The feedback from the project stakeholders will begin to shape any fallback plan. If, for example, the stakeholder group determine that the project must be up re-aligned within 48 hours of an incident to stay viable, then you can calculate the amount of time it would take to execute the fallback plan.
- Test – Once your fallback is set, ensure it is viable by continual test or analysis. A fallback plan may not be used immediately and because of this fallback plans may lose their relevance as the project progresses.
The fallback plan is not going to be fool proof so needs to be thought out and tested for viability. Remember, the best laid plans are not always going to be the most effective plan for the fallback plan.
When a contingency or fallback plan is created to serve as a disaster recovery plan, the project should often focus on the creation of a process that accomplishes three goals:
- the plan allows the day to day operations of the project to continue without a great deal of interruption or interference.
- the backup plan is capable of remaining functional for as long as it takes to restore proper function to the primary plan.
- the plan minimises inconvenience to customers, allowing the project to continue providing goods and services (when needed) in an orderly and time-efficient manner.
It should be remembered that fallback and contingency plans, as we have discussed here, are not the norm in project risk response planning. The frequency is based on the significance of the project to the organisation or the environment in which the project is managed.
The risk response plan may also identify specific triggers, which are events that generate action based on the escalating proximity of a given risk. As risks become imminent, the risk response plan identifies what actions should occur and who is responsible for implementing those actions. This is often the precursor to bringing a contingency of fallback plan to life. Some further things to consider are when implement a contingency or fallback plan are: –
- Residual risks. Residual risks are those that remain after avoidance, transfer, or mitigation responses have been taken. They also include minor risks that have been accepted and addressed, e.g., by adding contingency amounts to the cost or time allowable.
- Secondary risks. Risks that arise as a direct result of implementing a risk response are termed secondary risks. These should be identified and responses planned.
- Contractual agreements.. Contractual agreements may be entered into to specify each party´s responsibility for specific risks, should they occur, and for insurance, services, and other items as appropriate to avoid or mitigate threats.
Let’s hope, you never have to evoke a contingency or fallback plan but if you do we hope this post has given you some food for thought.