What does the term 'contingency planning' refer to?

The term 'contingency planning' refers to a prepared course of action for unforeseen events. This concept is crucial in business management as it involves developing strategies and protocols to address potential emergencies or unexpected situations that could disrupt normal operations. By having plans in place, businesses can react promptly to challenges, minimizing downtime and loss. Contingency planning equips organizations to handle various scenarios, such as natural disasters, supply chain disruptions, or sudden market changes, ensuring that they remain resilient and can maintain continuity in their operations.

The other choices focus on aspects like employee satisfaction, sourcing materials, and cost-saving strategies, which do not encompass the proactive nature of planning for unexpected events. Hence, they do not adequately describe what contingency planning involves.