The formal definition of contingency planning is: The development of a management plan that uses alternative strategies to ensure project success if specified risk events occur.

In other words, a business needs to have back-up plans for all aspects of their operations in order to plan for worst-case scenarios. This is done in order to avoid panic in case things go wrong. If contingency plans are in order, then preparations could be done in advance, drills can be done with employees, and financial numbers can be crunched.

Shared vision.

Every firm has a vision - every company has goals, and works hard to achieve their goals. Every department works together to achieve these vision. The financial team works out how to finance and invest money for the good of the company, the market researchers study how consumer are interested in the product and how willing they are to purchase it, human resources works to improve employee relations and work hard to satisfy employees.

All of these departments are interconnected in the sense that they all share the same vision - to make the company profitable and successful. Thus, it is necessary for the departments to all collaborate together and make a contingency plan should something occur and normal business activities are interrupted, preventing the firm from achieving its collective vision of financial successes. One primary goal would be to make sure that if the company shuts down, no one looses their job. This contingency plan can be developed by HR and the financial department. If operations slow down and less product is available for purchase then the marketing teams needs a contingency plan with the operations team on how to minimize the disaster, and on how to rectify the solution quickly without causes consumers to loose confidence. This type of planning is a form of fuzzy boundaries within departments who work on a contingency plan in advance to make sure that the firm continues to operate.
My father in law used to be director of finance at a large rail road company. He told me that in his office he had hundreds of binders containing contingency plans that he developed with other departments (accounting, marketing, operations) in case any known disaster would occur. The main goal of this was to make sure that if something were to happen, the different departments would work together to maintain their shared vision of their firm - that the firm would continue to operate in a way which would guarantee their jobs and salaries.

Roles:
All departments have their own roles. Accounting takes care of the books, marketing sells and promotes the product, financial invests the product and takes care of the financial situation of the firm. All departments know their roles and they take care of them quite well under normal circumstances. Things however could fan out much differently should a disaster occur. What could such things be? Some examples could be the 1992 Chicago Flood or the 1993 World Trade Center Bombing to stress that while we tend to think of a disaster in catastrophic terms such as a building fire, natural flood, earthquake, or hurricane. Other totally unexpected causes can also cause significant business interruption which could be disastrous to the corporations. Some of these may be: Civil Unrest, Sabotage, Terrorist Activities, Power Grid Failure, Telephone Failure, Other Utilities (i.e. gas), Inclement Weather, Asbestos, Carcinogens, Computer Viruses, Corrupted Data, or Equipment Failure.

In this case, it would be good for businesses to create contingency plans where they delegate specific roles to specific people, regardless of what department they normally work in. For example, in the case of a fire, Billy from accounting is a volunteer fire fighter and therefore, he would take control of evacuating all the employees from the office.
Or for example, there is an earthquake that is dangerous, and Susan from marketing is in charge of a specific safety task. It is necessary to come up with a contingency plan in advance, so that chaos does not breakout during the period of problems - and the delegation of roles should be amongst all employees - not left for upper management to take care of themselves.

Information:

Having clear information ready for all staff members is essential for a timely response by employees, which will help the company get back on its feel quickly should a disaster strike. If information on contingency planning is readily accessible, and if all employees take the time to read and understand it, quick action can be expected by all departments. Information readily available could include:
? Disaster preparedness. These activities reduce the likelihood and impact of a disaster. After a company identifies its vulnerabilities, it can take steps to ensure it is protected. Such steps may include security systems, backup power generators, fire protection systems, data backup and protecting vital records.
? Emergency response. Organizations must have adequate plans for ensuring the safety of employees and, where necessary, the community. Employees must be trained in how to respond when a disaster strikes.
? Business continuation and restoration. Companies must define priorities, arrangements and procedures that will keep a company viable during and after a disaster. After identifying operational vulnerabilities, they must prioritize the allocation of resources so critical operations can continue while the business recovers. Business continuation involves advanced planning for alternate locations in the event of a prolonged facility shutdown and arrangements with suppliers to replace specialized materials or equipment. It also addresses the potential need to build a new facility.

All employees should have to read the information discussed above, and a company wide meeting should be held yearly to discuss the information, and make sure all departments co-ordinate to implement the contingency plan.