Will a Little Contingency Planning Go a Long Way for Retailers?

A Gartner survey of marketers found 81 percent have contingency plans to respond to disruptions, but just 21 percent follow through.

The survey of nearly 400 marketing professionals conducted last December revealed that 44 percent who enacted a contingency plan during an economic disruption event exceeded their year-over-year profit growth goals.

“With ongoing economic and geopolitical disruption, contingency plans are more important than ever,” said Greg Carlucci, senior director analyst in the Gartner Marketing practice.

Beyond failing to follow through, neglecting or postponing contingency planning appears to be the other significant shortfall:

• A Gartner survey of CFOs from April 2020 found 42 percent were not incorporating a plan for a second-wave outbreak of COVID-19 for the remainder of that year;
• A survey of information security officials from cybersecurity firm Bitdefender taken in May 2020 found half didn’t have an organization contingency plan or didn’t know if they did for COVID-19 or a similar scenario.

Bain & Co. notes that contingency or scenario planning involves defining extreme but plausible scenarios and then testing the impact of each on future business performance. Bain states, “By raising and testing various ‘what if’ scenarios, managers can brainstorm together and challenge their assumptions in a nonthreatening, hypothetical environment before they decide on a certain course of action.”

Alan Price, CEO at BrightHR, stressed in a recent column for Forbes that identifying risks when setting up contingency plans has to be followed by coming up with practical solutions. “Be sure to emphasize the how, not just the what. It’s no good saying you’ll resolve a severe lack of staff by hiring agency workers if you don’t know the cost or process involved. When planning alternatives, keep in mind what’s realistic for your business,” he wrote.

Bonnie Hancock, executive director of NC State’s Enterprise Risk Management (ERM) Initiative, told the NC State’s blog that beyond natural disasters or emergencies, contingency planning “can also be used to plan for more strategic things – like unexpected competitor moves. Companies that aren’t leveraging contingency planning to advance their strategic objectives are missing a huge opportunity.”