window.dataLayer = window.dataLayer || []; function gtag(){dataLayer.push(arguments);} gtag('js', new Date()); gtag('config', 'UA-44761406-1'); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start': new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0], j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src= ''+i+dl;f.parentNode.insertBefore(j,f); })(window,document,'script','dataLayer','GTM-5QW7RD');
Resources >   Business Development  >  

Your guide to risk assessment and contingency planning

Business Development

Your guide to risk assessment and contingency planning

Updated: 17 March 2023

Rosaline Laverley, Global Head of Enterprise Risk at Funding Circle, talks to us about how to build an effective contingency plan, and the key scenarios your business should prepare for.

Contingency plans help businesses prepare for unexpected events that could either disrupt how they operate, or lead to changes in the market that affect your revenue and value. Creating your contingency plan can be daunting, as there’s so many different scenarios that could occur. To get you started, there are four scenarios that every business should consider.  


As the last few years have shown, a pandemic can upend your business completely. Further Covid waves or future pandemics could differ in severity, but considering how you would cope if your staff were unavailable, premises were restricted and so on will be key to keeping your business running. Learn the lessons of Covid and plan for the future.


Planning for a recession is more about forecasting. What could your turnover look like in a mild, medium or deep recession? If it’s going to be much lower, how much extra cash do you need? Could you work with reduced staff, or slim down your operations? Plan for a few scenarios so you can take steps quickly to early signs of an economic dip.  

People and illness

If a key member of staff falls ill or has to take extended leave, your business still needs to run. Consider what would happen if you or another leader in the business had an accident or was taken ill. Decide who would cover for them and make sure they’re trained up. Cross-training like this helps to share skills around your business and will make you more resilient. 

Supply chain 

You may use third parties to deliver goods or services, but what happens if they’re unable to deliver? Make sure you have a list of alternative suppliers, and have assessed the costs of transferring. For example, you may have a good relationship with your current wholesaler which will be lost when you move, so it’s important to plan for some initial friction or extra expense. 

Now you’ve thought through some of the key risks, here are some tips to make your planning as effective as possible. 

1.) Always have a buffer 

You can’t plan for everything, so you should always have a cash flow buffer in place. A line of credit is a brilliant option, as you can use it whenever you need it – but remember to apply for this when your business is strong. If you wait until a recession or your business is struggling, credit will be harder to get, and it’s likely you’ll be offered a smaller amount and potentially at a higher interest rate. 

2.) Practice makes perfect 

You can put all of your plans down on paper, but if you don’t practise them, they won’t mean anything. You should review and do a dry run of your recession and supply chain plans at least once a year, or more often if a recession looks likely. For your people plan, as this can all be done internally, I’d check them on a quarterly or even on a monthly basis, in case of staff changes.

3.) Don’t be afraid to ask for advice

It’s good to do your contingency planning in-house, as you and your staff will know what it takes to run your business day-to-day and can lead changes if a risk strikes. But for financial plans, it can be useful to hire a financial adviser to assess your operations, and advise you on how to deal with any upcoming problems. 

4.) Know your industry 

Aside from the above, there are many other risks that could befall you – system failures, damage to premises, data leaks and so on. Each one will vary depending on your industry; hospitality fared very differently to e-commerce during Covid for example. You could join trade or industry associations to compare your plans to those of other business owners, and even agree on a more collaborative response when an incident occurs. 

17/03/23: While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial or legal advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.

Great Review: