What is a contingency plan?

A contingency plan refers to an alternative course of action designed to be implemented if certain predefined events or conditions occur that could create problems for a business. The primary purpose of a contingency plan is to ensure that an organization can respond effectively to unexpected changes or emergencies, minimizing disruption and allowing the business to maintain operations. This proactive approach involves identifying potential risks and outlining the steps to address them, thereby ensuring preparedness in the face of adversity.

In contrast, the other options do not capture the essence of what a contingency plan is. A detailed marketing strategy focuses on how to effectively reach and engage customers rather than preparing for unforeseen issues. A financial forecast is concerned with predicting future financial outcomes based on current data and assumptions, which is different from planning for crises. An operational efficiency plan aims to streamline processes and improve productivity, rather than providing a blueprint for responding to specific problems that may arise.