How emergency preparedness can save your business

What is a business continuity plan? SAP’s global HR value advisor, Chiara Bersano, has a unique perspective on the question. In 1999, she was working for a global company that operated a factory in Izmir, Turkey, when a devastating earthquake ultimately left more than 17,000 dead and 250,000 homeless. Her company’s employees, however, fared better than most.

So, what is contingency planning? If you ask Bersano, it’s creating an emergency-response framework that results in retaining a healthy, motivated, dedicated workforce during and after crises.

“The power of relationship building from a crisis is extreme,” Bersano says. “It’s building a relationship based on trust with the employees.”

“Firms will go bust”

The Guardian. April 2022. Firms will go bust’: Germany prepares for a future without Russian gas.

In Germany, they call it “Day X”. Businesses up and down the land are making contingency plans for what is seen as a growing likelihood that Russian gas will stop flowing into Europe’s biggest economy.

“It would be a disaster – one which would have seemed almost unthinkable just two months ago, but which right now feels like a very realistic prospect,” the owner of a hi-tech mechanical engineering company in western Germany said. The firm produces everything from battery cases for electric cars to train clutch systems. 

The speaker did not want to be named, or for his company to be identified, in part for fear, he said, of appearing to support Russia’s war by making the case that if the gas is turned off, his century-old business “will likely not survive”.

But he says he is in a deep quandary and feeling very vulnerable, as he is not only heavily reliant on gas – the cost of which has already soared – but also on metals such as nickel and aluminium, much of which comes from Russia.

‘We are in a gas crisis.’ Germany raises emergency level.

New York Times. June 2022. Germany’s economy minister triggered the second stage of a contingency plan a week after Russia cut back on gas to Europe, sending prices soaring and raising fears of shortages.

Germany warned residents and businesses on Thursday that the country was in a natural gas crisis that could worsen in coming months.

“The situation is serious, and winter will come,” Robert Habeck, Germany’s economy minister, told reporters at a news conference in Berlin. He said the government had triggered the second stage of its three-step energy gas plan; the next stage would permit the government to begin gas rationing.

“Even if you don’t feel it yet: We are in a gas crisis,” he said. “Gas is a scarce commodity from now on. Prices are already high, and we have to be prepared for further increases. This will affect industrial production and become a big burden for many consumers.”

Covid

February 2020. Deutsche Welle. Germany has already faced its first coronavirus infections. Officials have remained calm, and border closures or lockdowns are not yet on the horizon. But the country has no specific pandemic plan for COVID-19.

“We assume it can and will have a slight impact on the global economy,” said Germany’s Economics Minister Peter Altmaier. “The extent will depend on how quickly this virus is contained and how quickly the number of infections slows down again.”

Contingency Planning: Family, Business

In the middle of an active, busy (working) life, many families and business owners are reluctant to even consider the possibility of an accident or illness. As a result, contingency planning tends to be neglected. When something does happen, it often turns out there is no general power of attorney or enduring power of attorney for care or healthcare in place, and nobody thought of a living will or final will.

Proactive contingency planning helps to ensure that your family or family-owned business has legal capacity at all times. Our Private Clients experts help you draw up an emergency planning checklist that covers all the key legal and financial aspects.

If a partner or shareholder is incapacitated for an extended period, it could paralyse the entire company, depending on the provisions in the articles of association. Accordingly, (managing) partners or shareholders should draw up a contingency plan that addresses the following questions, in addition to their personal affairs.

Contingency Planning with proxies

In Germany, proxies are used for contingency planning, especially general proxies (Generalvollmachten) and precautionary proxies (Vorsorgevollmachten).

The general proxy entitles the authorised representative to take decisions for the principal in a large number of cases. The precautionary proxy focuses on decisions which have to be taken if the principal is no longer able to take care of his financial or personal matters, e.g. due to an illness.

Leaked German military documents

The Guardian. 2017. A leaked defence document has revealed the country’s worries about the breakup of the global order – a scenario with serious consequences for post-Brexit Britain.

The German defence ministry set out its worst-case scenario for the year 2040 in a secret document that was leaked to Der Spiegel last week: “EU enlargement has been largely abandoned, and more states have left the community … the increasingly disorderly, sometimes chaotic and conflict-prone, world has dramatically changed the security environment.”

The 120-page-long paper, entitled Strategic Perspective 2040, is a federal government policy document – and the scenarios it imagines are grimly realistic: an east-west conflict in which some EU states join the Russian side or a “multipolar” Europe, where some states adopt the Russian economic and political model in defiance of the Lisbon treaty.

contingency

MerriamWebster: a contingent event or condition: such as an event (such as an emergency) that may but is not certain to occur trying to provide for every contingency; something liable to happen as an adjunct to or result of something else, the contingencies of war.

A contingency plan, also known colloquially as Plan B, is a plan devised for an outcome other than in the usual (expected) plan. It is often used for risk management for an exceptional risk that, though unlikely, would have catastrophic consequences.