Risk contingency is a plan for handling a risk if it occurs. This doesn't reduce the probability of the risk occurring but reduces the impact should it occur. The following are common types of risk contingency.
BudgetContingency budget set aside to manage the impact of risks. For example, a construction project that includes cost contingency in its budget to handle the risk of construction delays.
ScheduleIncluding contingency time in schedules to handle likely delays.
Human ResourcesPreparing teams to continue without key resources with techniques such as training, knowledge transfer, resource planning and scheduling. For example, a factory that ensures that at least 3 people on every shift know how to operate a critical machine such that production can continue when someone calls in sick.
LocationsPreparing a work area for disaster recovery as a hot or cold site.
EquipmentMaintaining idle or underutilized equipment that can be used in the event of equipment failure.
InventoryStocking ample inventory. For example, a restaurant that manages the risk of a late food delivery by slightly overstocking.
ProceduresEstablishing processes and procedures to handle risks when they occur. For example, developing a plan for managing an information security incident.
TrainingTraining employees to deal with situations that might occur. For example, a theme park that trains employees how to deal with a major earthquake such as equipment that needs to be shut off and instructions to be provided to customers.
CapabilitiesDeveloping capabilities that can be used when a risk occurs. For example, a theme park with first aid services and a program of first aid training for staff.
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