Contingency Plans: Why You Need One to Make Room for the Unexpected

A contingency plan is a prepared set of actions you can take if something unexpected happens. Think of it as a plan for a “what if” scenario for turbulent live events, like a shift in your finances or health. Most people go through life without a plan B, without seeing the need for planning for the unexpected. These five steps will help you create good contingency plans, so you aren’t caught unaware. (Estimated reading time: 11 minutes)

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“To expect the unexpected shows a thoroughly modern intellect.”

— Oscar Wilde

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Every successful business person, medic, or military personnel knows they need a solid contingency plan. Beyond these domains, most people go through life without seeing the need for a plan B. 

But to survive in an increasingly unpredictable world, we must train our brains to embrace uncertainty and be prepared for the unexpected. This is why we need a contingency plan.

The importance of preparing for different scenarios has been well documented in ancient texts, the most famous being Sun Tzu’s “The Art of War”. Sun Tzu was a renowned Chinese military general, strategist, philosopher, and writer who lived during the Eastern Zhou period of 771 to 256 BCE.

“The Art of War” is considered an influential work of combat strategy that has impacted military thinking and East Asian and Western philosophy. Its doctrine and strategies are a valuable guide to navigating conflicts and winning battles.  

One of the maxims from Sun Tzu’s masterpiece is, “The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.”

That means exactly what it sounds like; always have a contingency plan. This is especially important when the stakes are high. When you know uncertainties are likely, you want to minimize the chance of being caught off guard and not knowing what to do.

When we forgo creating a contingency plan, we risk experiencing stress, anxiety, and missed opportunities. Fixating on a set plan and a strict timeline means the shock is harsh when we realize that life has other plans. We can never fully account for detours and setbacks, but we can do certain things to ensure that we don’t fall apart and can spring back.

Even if we’re faced with sudden macro changes, such as environmental disaster, financial crisis, or a medical emergency, we can manage it better with a clear and objective approach to handling ambiguity in life. Contingency plans are the bridge that gets us to the other side regardless of the turbulence below.

What is a contingency plan?

A contingency plan is a set of actions and decisions you can take in the event of the unexpected. Think of it as a plan for a “what if” scenario for turbulent events, like a shift in finances or your health. It’s the mental insurance you invest in so that you have an escape route if the unexpected occurs — backup hardware that protects all the essentials when the world crashes down around you.

Here are some examples of contingency plans for everyday life:

• Having a savings fund where you put away at least three to six months’ worth of expenses in case you lose your job
• Appointing a guardian for your children in case anything happens to you and your partner
• Building a supportive network of friends and mentors you can turn to when you’re in trouble or need help

Why is having a contingency plan important?

A contingency plan is your manual for damage control when things pan out differently than expected. It allows you to act quickly and effectively without compromising your mental health, security, and safety.

Setting contingency plans is reassuring and gives you peace of mind. You can be fully present in the moment and focus on doing your best. Planning for the road ahead makes it easier to handle obstacles and delays as you pursue your goals.

When we analyze the stories of those who have succeeded in their chosen fields, we’ll see that they all had a contingency plan, even if it was not ideal. When filmmaker Tyler Perry moved to Atlanta at age 23, he was motivated to start working on his stage career. In 1992, his first theater production, “I Know I’ve Been Charged,” debuted. He put all his savings into the show, which failed badly. It lasted for one weekend, and only 30 people attended.

Perry, however, was fully aware of the fickle nature of the entertainment industry and the importance of playing the long game. He kept up the production while working odd jobs, often sleeping in his car to make ends meet. Six years later, the show finally broke through and became a success. He is now one of the highest-paid men in entertainment.

Perry would not have had the same level of success if he hadn’t planned for failure. Planning an alternative income stream while his show slowly gained traction with audiences saved him from having to step back from his dreams. His story proves the vital important of contingency plans.

Unexpected shake-ups don’t only occur in personal lives but also in the world of business. During the COVID-19 pandemic, many companies forced to close were unprepared for crises. They could not keep their heads above water when revenue stopped coming in because they did not build a buffer between what they expected and what actually happened.

Life rarely follows a script. It’s up to us to expect the unexpected ahead of time. Doing so will pay dividends in the future in material and emotional prosperity. 

Can we expect the unexpected?

Mathematician John Allen Paulos said, “Uncertainty is the only certainty there is, and knowing how to live with insecurity is the only security.”

When viewed through this lens of this truth, “planning for the unexpected” is an oxymoron.

You can’t plan for what author Bruce Feiler defines as “life quakes,” a forceful change in one’s life that leads to upheaval, transition, and renewal. This includes getting a medical diagnosis, having a partner cheat on you, or losing a loved one. According to Feiler, 53% of life quakes are involuntary.

However, many unexpected things occur in our lives because we take things for granted, like health, food, youth, safety, and other privileges.

First, we must realize that nothing is guaranteed and do our due diligence. There are two ways to prepare for events we can’t predict: a right-brained approach and a left-brained one.

The left-brained camp uses models like risk management, a process to control as much as possible. They plan for future outcomes by acting proactively rather than reactively. This involves analyzing past trends and patterns and using that to predict future possibilities. They also consider the odds and probabilities that certain things can happen.

Insurance companies charge a higher premium for people working in hazardous careers, such as firefighters or truck drivers, than those in low-risk office jobs because there’s a higher chance of injury. Similarly, we need to take precautionary measures for the high-risk areas of our lives.

The right-brained approach encourages a less hands-on approach to planning for the unknown. At some point, we need to let go of control and our need to manage outcomes. Worrying is pointless because we can’t plan for something we cannot control.

Instead, the right-brained approach focuses less on rational planning and more on adaptability. In this way, you can channel more energy toward the things you can control while staying open to other possibilities. You can attend to creating a healthy mindset and manage your energy to face any possible outcome.

When we leave the door open for the unexpected, we might find paths that can make us happier than those we planned. By letting go of control and surrendering, we co-create with the universe and trust that the circumstances will be the best for us, even if it’s not our plan.

A combination of strategic risk management and spiritual surrender is the best model to use when planning for uncertainty and contingency plans. All our bases are covered, and we’re mentally, emotionally and spiritually prepared.

How to create good contingency plans

These five steps to creating good contingency plans can be applied in any area of life – business, finances, relationships, and health. Start with the area you believe carries the most risk and where the stakes are highest.

If needed, get the help of friends, a professional, or anyone who can look at the situation objectively and has expertise in the subject you’re inquiring about.

1. Acknowledge what you can and can’t control

Before creating any contingency plan, it’s better to get a reality check. There are certain things that you can and can’t control. Keeping these in mind will allow you to set your expectations accordingly.

What you can’t control:

• If people like or dislike you
• How others treat you
• When you die
• When other people die
• The weather
• The passing of time
• Natural disasters
• Accidents
• Your physical needs
• The past
• The future
• The inevitably of change
• Who you’re related to
• Physical and mental limitations that can’t be fully cured
• The outcome of anything (although you can influence it)

What you can control:

• Your actions and reactions
• Your mindset and beliefs
• How you perceive situations
• The way you treat others
• How you spend time, and with whom
• Where you put your focus and energy
• Caring for your mental, emotional, physical, and spiritual needs
• Living by your vision and values
• Learning to love and appreciate yourself
• Your ability to adapt to change
• Your proactivity in creating opportunities
• Your willingness to take calculated risks
•  Your presence and image
• The time and effort you put into your personal growth
• Which emotions you hold onto, and which ones you let go of
• Your boundaries
• Who and what you choose to support, and how

2. Identify

Before you can plan for and resolve risks, you first need to identify them. Start by listing all risks that might impact you. Consider the different stages of the process and make sure your contingency plan factors in the magnitude and the scope of risks.

Use these questions as prompts to brainstorm and predict different scenarios:

• What are the things that could go wrong?
• How likely is it that it could go wrong?
• What is the best way to react and problem-solve?
• What actions and decisions can I make to prepare in advance?

For example, getting a job at a company that has a high employee turnover rate is riskier than one where people stick around for a long time. You could prepare by building your professional network and planning a job search strategy that you execute if you feel that things are unstable.

If you’re prone to anxiety, remember to manage your emotions as you walk through this process and try to be as objective as possible. Get others’ input if you need help forecasting future risks.

3. Prioritize

Review the list you created and rank your risks by their likelihood and possible impact on your life. You don’t need a contingency plan for every risk you’ve identified because all risks aren’t equal, and your contingency plan can’t go into depth on each one. Prioritize the risks for two metrics — likelihood and severity — and label them as high, medium, or low.

Determining potential risks and prioritizing them is a crucial aspect of a contingency plan, so take your time with it. There’s no one-size-fits-all process, and you need to consider all the other parts of your life, the people involved, and the context of each situation.

For instance, buying health insurance for a loved one who has a chronic health condition may take priority over other financial investments you want to make.

4. Plan

The next step is to outline your contingency plan. Given what you know, how can you allocate the resources available to you to design solutions to deal with the risks, especially the high-priority ones? Ensure your plan is clear and simple to understand so you can use it months or years later when needed.

Your contingency plan should include information about:

• The triggers that will prompt the plan (car breaks down)
•  Immediate response (get a towing service and send it for repairs)
• The resources you will need for the plan (finances, time, effort, money to pay for repairs, alternative transport)
• Who will be informed and involved, and what are their responsibilities (a friend or family member whose car you can borrow and who can drive you back home)
• Actions that need to be taken to prepare in advance (invest in car insurance and carry a car tool kit)
• The timeline of your responses (the amount of time that the car will be sent for repairs)

5. Execute

If your plan includes actions to prepare for future risks, act on them. This may involve accumulating resources, purchasing certain items and services, and informing colleagues, friends, and family members about what to do if certain things happen.

For example, if your partner loses their job, you’ll need a plan to cover household expenses while they search for another one. You will need an emergency fund from which you can pull funds if less money is coming in and find ways to reduce costs.

6. Review

As time goes on, things shift. You should review and make modifications regularly to adjust for these changes. Some risks may be more or less likely or may cause different outcomes. Evaluate each item on your plan and update the solutions based on the new factors.

Using the same example above, your partner may have decided to stay home to raise your children, making you the sole breadwinner who secured your finances by making well-calculated investments.

Motivational speaker Jim Rohn said, “If you go to work on your plan, your plan will go to work on you.” When we create contingency plans, we have more than one plan to work for us and bring us closer to the vision for our lives. The thought and heart put into the planning process creates the momentum and drive to carry us forward into the future.

All my best on your journey,

Seline

Question for you: Have you ever made contingency plans that turned out to be helpful? What motivated you to make them, and what did you learn from the experience?

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