Financial Contingency Planning

Financial Contingency Planning

Introduction

Financial Contingency planning can be defined as problem solving in response to any uneven situation. Financial pundits and market analysts are on the view that companies need to plan for the contengencies especially in current times of dynamism. This contingency plan is an alternative plan to be put into operation when required to address issues such as changes to weather conditions, unexpected staff shortages, sudden equipment or communication failure, large variation in expected crowd sizes, problems with traffic or crowd congestion, theft, damage, vandalism and lost children. The contingency response should demonstrate 'what will be done if things happen, despite our best efforts (Alexander, 2002).

A financial contingency plan for an event identifies what needs to be done, and by whom, in response to an incident. Incidents can range from fence-jumping to fainting, theft and assault. Fire, accidents and other emergencies are contingencies that also need to be planned for and for which procedures need to be developed that give direction, if an incident occurs.

Developing a financial contingency plan is a process that occurs after risks have been identified in terms of their likelihood and consequence of occurring in the area of financial operations. Where risks carry consequences that will result in injury or financial loss, or where they have an environmental impact, a contingency plan must be developed in the event that the problem eventuates (Arringdale, 1997).

A contingency plan should contain the following:

Identification of the possible occurrence

Actions to be taken

Roles and responsibilities of the staff and services involved in those actions

Reporting requirements.

In developing a contingency plan, one needs to consider regulatory requirements such as keeping records and reporting to the authorities. There may also be different levels of response to a situation or incident. A contingency response may describe the response to an incident or describe alternate arrangements that may be put in place (e.g. responses to adverse weather conditions). Critical incident responses can detail the type of response to a situation that is life threatening or an emergency (Barnes, 2001). It is also essential to decide who can deal with these situations as, in some cases police and other emergency services personnel are the only people who can deal with the situation adequately. In the event industry, this is known as 'escalation' and it is important to write policies and procedures that show event staff when to escalate a problem that they are unqualified to deal with, and how to communicate it up the chain of command (event organizational structure).

All contingency planning should set strategic objectives and an action plan to achieve those goals. Here we see the fundamental differences between contingency planning and planning objectives:

Contingency planning involves working with hypotheses and develop scenarios on which to base planning

Planning objectives and know the starting point and will be based on the assessment of needs and resources.

A contingency plan should be comprehensive but without going into too much detail, it should be easy to read and easy to ...