Difference Between Contingency Plan and Business Continuity Plan

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The main difference between a Contingency Plan and a Business Continuity Plan is that a Contingency Plan is specifically designed for responding to identified emergencies or specific events that disrupt normal business operations, while a Business Continuity Plan is a more comprehensive approach that focuses on the continuation of all aspects of business operations during and after a crisis or disruption. The Contingency Plan is typically more narrowly focused and reactive, dealing with specific scenarios and their immediate management, whereas the Business Continuity Plan encompasses broader strategies to ensure that the entire business can maintain or quickly resume critical functions under a variety of adverse conditions.

What is a Contingency Plan and What is a Business Continuity Plan?

A Contingency Plan is a proactive strategy developed by businesses to address specific potential threats or emergencies that could disrupt normal business operations. This plan typically outlines specific steps and procedures to be followed in the event of such disruptions, which could include natural disasters, technological failures, cyber-attacks, or other crises. The primary focus of a Contingency Plan is to quickly manage and resolve the specific emergency, minimizing downtime and damage to the organization.

A Business Continuity Plan, on the other hand, is a comprehensive strategy that ensures the continued operation of a business during and after a crisis. This plan covers not only emergency response but also the ongoing functionality of all business aspects, including critical operations, employee safety, data protection, supply chain management, and communication channels. The goal is to minimize disruption and ensure a smooth transition during the crisis, with plans for recovery and restoration of full business functionality.

Key Differences Between Contingency Plan and Business Continuity Plan

  1. Scope of Planning: Contingency Plans are typically more specific and focus on particular scenarios or emergencies, whereas Business Continuity Plans cover a broader range of potential disruptions and include long-term recovery strategies.
  2. Focus Area: Contingency Plans are generally reactive, designed to address and manage specific crises as they occur. Business Continuity Plans are more proactive, aiming to ensure uninterrupted business operations during and after various disruptions.
  3. Duration and Recovery: The Contingency Plan often deals with immediate response and short-term solutions, whereas the Business Continuity Plan includes long-term strategies for recovery and maintaining operations.
  4. Operational Breadth: Business Continuity Plans encompass all aspects of a business, including critical functions, employee safety, and customer relations. In contrast, Contingency Plans may target more specific areas or functions.
  5. Risk Assessment: Business Continuity Plans typically involve a comprehensive risk assessment to identify a wide range of potential threats. Contingency Plans may focus on risks associated with specific identified threats.
  6. Integration with Business Strategy: Business Continuity Planning is often integrated into the overall business strategy, whereas Contingency Planning may be more standalone or focused on particular operational areas.
  7. Resource Allocation: The resource allocation in Business Continuity Planning is usually more extensive, covering various aspects of the business. In Contingency Planning, resources are allocated specifically for dealing with identified emergencies.
  8. Communication Strategy: Business Continuity Plans generally include detailed communication strategies for stakeholders, employees, and customers. Contingency Plans may have more focused communication strategies pertinent to the specific crisis at hand.

Key Similarities Between Contingency Plan and Business Continuity Plan

  1. Objective of Mitigating Disruption: Both plans aim to mitigate the impact of disruptions on business operations and ensure a level of continued functionality.
  2. Risk Management: Both involve identifying and managing risks to the business, although the scope and methods may differ.
  3. Planning and Preparation: Each requires careful planning and preparation to be effective in response to disruptions.
  4. Involvement of Key Personnel: Both plans typically involve key personnel from various departments within the organization for effective implementation.
  5. Documentation and Procedures: Both Contingency and Business Continuity Plans include documented procedures and protocols to be followed in the event of a disruption.
  6. Training and Testing: Regular training and testing of the plans are essential to ensure readiness and effectiveness in both cases.
  7. Continuous Improvement: Both types of plans are subject to ongoing review and improvement based on lessons learned and changing business environments.

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*Based on a survey of small businesses using QuickBook Online conducted September 2018.