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"I sat in my chair, saying, `It's going to stop,'" says Roberta Martoza, risk manager for Seattle-based Amazon.com, as she describes her experience during the February earthquake. "Then the second wave hit. `Under the desk,' I said." She and the two staff members she was meeting with crawled under her desk.
"It is progressively getting worse, it is lasting forever. I'm under my desk, under a window, and I'm thinking, `The glass is going to break and I'm going to get cut.' Then it occurs to me, `I'm in a nineteen-thirties brick building.' I almost started panicking, then stopped myself. `You're doing all the right things. The building's been retrofitted. All you need is to be in control.'"
Control in a crisis is an elusive, but vital, quality. Without it, a business is left to the mercy of the catastrophe-in whatever shape it arrives. But with an effective contingency plan in place, the job can be made a lot easier.
Take Amazon.com, for example. Moments after the earthquake, employees were gathered outside the building, away from any possible danger. Jeff Bezos, the company's founder, was calming the crowd down and explaining what everyone would have to do. A water main was shutdown to cut off a cascading waterfall near the elevators. Structural engineers on staff were going through the building to assess the damage. All customer service calls were routed to an alternate location in West Virginia. The previously contracted clean-up crew was contacted. And just over twenty-four hours later, everything was cleaned up and it was business as usual at Amazon.com.
Defining Contingency
No matter how carefully a firm formulates, implements and evaluates their strategies, unforeseen events can make a planned strategy obsolete in no time. The seriousness of the circumstance and its impact on an organization is in many cases directly related to how prepared an organization is in advance.
Contingency plans are alternative plans that can be put into effect if certain key events do not occur as expected, as defined by Dr. Fred David in his book, Concepts of Strategic Management, (Prentice Hall, 1998). Or, as Lester Digman explains in Strategic Management: Concepts, Processes, Decisions (Dame Publications, 1998), contingency plans are preparations that are considered if situations arise that were not...