A contingency plan is a plan devised for an outcome other than the usual plan, often used for risk management for an exceptional risk that, though unlikely, would have catastrophic consequences. It is a course of action designed to help an organization respond effectively to a significant future incident, event, or situation that may or may not happen. Contingency planning is a component of business continuity, disaster recovery, and risk management.

Contingency plans are often devised by businesses or governments, and there are five steps to implementing a contingency plan, which are organizing a planning team, assessing the scope of the problem, developing a plan, testing the plan, and keeping the plan up-to-date. During times of crisis, contingency plans are often developed to explore and prepare for any eventuality.

Contingency planning involves making various decisions as an organization before an emergency happens, ranging from how to manage human and financial resources, how to best coordinate internally and with partners, and what communications procedures to put in place. The contingency planning process can be broken down into three simple questions: What is going to happen? What are we going to do about it? What can we do ahead of time to get prepared? .

Contingency plans provide a structure for assessment and actions to recover from unexpected events, and the faster the recovery, the less potential there is for damages. Benefits of contingency planning include saving time, saving money, quick recovery time, and minimizing damages.

In summary, a contingency plan is a proactive strategy that helps organizations mitigate the negative effects of risks and respond effectively to significant future incidents, events, or situations that may or may not happen. It is a crucial component of business continuity, disaster recovery, and risk management.