Risk Contingency Plan Vs Mitigation Plan

 Risk Contingency Plan Vs Mitigation Plan

Contingency plan: (Reactive)

The Project Management Institute defines contingency planning as, “involving defining action steps to be taken if an identified risk event should occur."

A contingency plan in project management is a defined, actionable plan that is to be enacted if an identified risk becomes a reality. 

It is essentially a “Plan B”, to be put in place when things go differently than expected for a "Plan A".

The essential components of an effective risk contingency strategy are:

• Make a list of risks
• Weigh risks based on severity and likelihood
• Identify important risks
• Conduct a business impact analysis
• Create contingency plans for the biggest risks
• Get approval for contingency plans
• Share your contingency plans
• Monitor contingency plan

Example for contingency plan:

A brokerage company may have a backup power generator to ensure that trades can be executed in the event of a power failure, preventing possible financial loss.

Synchronise data with a second data centre and switch operations to the second data centre in the event of the first one going down.

Mitigation Plan: (Proactive)

Risk mitigation describes a process by which a project reduces its exposure to risk and works towards minimizing the likelihood of any issues arising during the project.

It involves a process that we’ll explore in a moment but essentially addresses the top risks to fully protect the project.

The essential components of an effective risk mitigation strategy are:

• Identifying likely risks
• Prioritizing risk 
• Preparation and responses
• Monitoring
• Updating the risk mitigation plan

The key difference between a contingency plan and a mitigation plan is that a contingency plan is reactive, while a mitigation plan is proactive.

Example for Mitigation Plan:

Airlines create risk mitigation plans to operate flights that are profitable and safe for all parties. They train pilots and check systems to limit internal risks and create guidelines that specify acceptable flying conditions.