The Importance of Contingency Planning

Business people meeting to plan, analyze and point to graph and chart about business growth to plan future expansion of new business.

By Jane Robson

Contemplating the worst-case scenarios for your financial enterprise is a crucial exercise. Considering unexpected events that could potentially send your business into disarray is not a pleasant thought, but being unprepared could have severe consequences, especially in the dynamic world of global finance.

Often, small businesses in the financial sector dismiss the importance of contingency planning, assuming it doesn’t apply to them. Ironically, these are the very businesses that stand to be most severely affected if an unforeseen circumstance, entirely beyond their control, unfolds.

Traditionally, businesses have focused on contingencies for events like adverse weather affecting travel or a fire disrupting office operations. However, recent times have brought new considerations to the forefront, such as the impact of cyber threats and the repercussions of global events like pandemics.

It might be helpful to revisit an older term, not commonly used, but apt nevertheless: ‘Disaster Recovery.’ This approach forces you to confront the worst-case scenario, pondering the potential disasters that could befall your financial enterprise and devising strategies to navigate them, however unlikely they may seem.

In the evolving landscape of remote work, where many financial companies opt for decentralized operations, the risks have evolved as well. While it might seem that the risk of a disaster has decreased with the absence of a permanent office address, the reality is more nuanced.

Contingency planning once centred on the potential loss of utilities at a single location, but now, businesses face the challenge of multiple locations losing utilities. Many financial firms rely on cloud-based servers, providing reliability and security, yet their effectiveness is contingent on the quality of internet connections. The simplicity of cross-training staff on various duties, ensuring coverage in an office setup, becomes more complex with remote work. It’s easier to overlook these aspects when your team is not physically present every day.

Remote work offers tremendous benefits, such as flexibility and increased productivity. However, it necessitates a keen awareness of associated risks. This reality hit home for me recently when my business experienced the sudden and tragic loss of a highly valued colleague.

So, what has this dreadful incident taught me about contingency planning, especially in the event of losing a key team member?

Firstly, it underscores the importance of recognizing the fallibility of both people and systems, even if you have robust procedures for saving documents and work. Emphasizing the significance of regularly saving work, especially in remote settings, is crucial. Contingencies for remote workers unable to access cloud-based servers should be in place, such as emailing a copy of their work to a colleague. Additionally, remote workers should have backup plans for Wi-Fi issues, like using mobile data connected to their phones, if only to transmit documents temporarily.

Secondly, thorough training and reinforcement of company policies and procedures becomes vital, especially with a remote workforce. A worst-case scenario could involve the death of a remote worker, making their laptop and equipment inaccessible. A shared calendar and contacts list, coupled with an agreement on how company data is stored on personal equipment, are essential safeguards.

In contemplating contingency planning for financial enterprises, particularly in worst-case scenarios, considerations go beyond general matters like adverse weather and cyber threats. Losing a key staff member, director, or partner poses specific challenges that demand attention:

Client Management: Establishing shared calendars and contacts lists facilitates reaching out to clients and managing outstanding work.

Equipment Ownership: Ensuring proof of ownership for company-provided equipment is vital. Receipts and serial numbers should be logged to prevent complications with the deceased’s estate.

Personal Equipment Usage: If staff members use personal laptops and phones, a clear agreement on company data storage and contingencies for Wi-Fi and server issues is essential and must extend to the deceased’s estate and consider data protection aspects.

Global Workforce Considerations: For remote staff based far away, even abroad, logistical plans need to be in place. Communication methods, language barriers, and local contacts for assistance, in this worst-case scenario of the death of a team member, should be established.

Next of Kin Information: Maintaining up-to-date contact details for staff’s next of kin is crucial, yet smaller businesses often overlook this. Gathering this information during onboarding and regularly confirming its accuracy with staff is essential.

While contemplating such devastating scenarios may be uncomfortable, acknowledging their possibility is a fact of life. Implementing plans to address worst-case scenarios may not erase the pain of loss, but it can alleviate the stress associated with such events.

About the Author

Author ---Jane Robson is CEO of the National Association of Licensed Paralegals (NALP), a non-profit membership body and the only paralegal body that is recognised as an awarding organisation by Ofqual (the regulator of qualifications in England). Through its Centres around the country, accredited and recognised professional paralegal qualifications are offered for those looking for a career as a paralegal professional.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.