Extenuating circumstances refer to unusual reasons preventing plans from being carried out and should therefore be forgivable.
Being unable to complete projects on a time due to extenuating factors for example, should not be the fault of the project manager as no one could have foreseen the unique events that caused the delay.
For example, a production factory might not be able to manufacture the required number of units of a product due to the delayed delivery of raw materials and intermediate goods caused by a landslide which covered the railway tracks.
Or a nationwide outbreak of a deadly virus and workers being ordered to stay at home by the health authorities.
Extenuating circumstances are typically due to events that out of the control of any one person and cannot be prevented.
With regards to business activities, extenuating circumstances can cause huge financial losses.
It is not limited to the direct loss of business from being unable to deliver products and services. It can also affect supply chains causing a business to incur opportunity costs as it’s unable to produce it’s products.
However, many such circumstances are insurable.
It is unlikely for instance, for a ship carrying the goods of a company to get lost at sea. But bad luck with the weather can cause shipping disasters. These risks can usually be insured with marine insurance policies such as open cover.
The low possibility of such events caused by extenuating factors do no mean that company’s can ignore them.
For example, even though a fire has never happened at a building, having employees understand the fire drill can be invaluable in the event that fire really happens one day.
Big organisations with a lot to lose usually manage such risk by drafting backup plans that can be activated on quick notice or purchase insurance for risk coverage.