Accounting for all eventualities should be a core concern for any business operating in today’s uncertain and often volatile political and economic landscape. Devising a realistic ‘Plan B’ in the event of a business critical event can go a long way towards limiting loss and preserving stakeholder value during times of financial or operational distress.
Whether it involves a power outage, or a fire, through to a data hack, or the loss of a key client or employee, planning for possible changes to operations is a necessary step in securing the long-term future of a business. A contingency plan helps the business remain agile and able to react swiftly the future is thrown into turmoil.
At RBR Advisory, our approach is twofold. Firstly to undertake a thorough risk management assessment to identify any possible risks, and secondly to devise and execute a robust plan to moderate these potential threats. Some threats are more likely within certain industries, and we will use our deep sector knowledge to highlight these potentially risky areas and suggest ways of mitigating the possible fallout.
Contingency plans range from ensuring simple things are in place such as setting aside cash reserves to cover periods of poor trading and ensuring adequate insurances are in place, through to more robust measures when the unexpected becomes reality.
We will ensure you are fully aware of any contingent liabilities the company has. This could take the form of a pending lawsuit, or potential customer returns particularly if products were supplied with a warranty. While these can be planned for in advance, the reality is that the actual cost is unknown until it happens; ensuring you have allocated enough cash in reserve to meet these expected yet unknown costs, is crucial to the continuing success of your business.
Contingency plans are also vital when insolvency threatens. With a huge number of stakeholders all with competing interests which are amplified during insolvency, the optimal solution may not always be possible. It is important to plan for likely barriers which may be encountered during such proceedings.
An independently constructed contingency plan can be used to present a viable strategy to resistant stakeholders in order to break a deadlock and allow matters to progress.