Until recently, most people around the world had never heard of Eyjafjallajokull. But that changed on April 14, 2010, when the small Icelandic volcano erupted. Lava flow (up to 65 feet thick) melted ice and caused flooding and evacuation. The explosion also sent a cloud of ash miles high, causing unprecedented closure of U.K., European and North Atlantic airspace.

Chaos. Confusion. Hundreds of planes grounded. Hundreds of thousands of people stranded. Delivery of goods brought to a halt. And the truth is, an unexpected natural disaster of this magnitude could happen again, anytime, anywhere—whether your business is ready or not.

Think of Eyjafjallajokull as a learning opportunity. This sudden volcanic eruption turned a global spotlight on business interruption practices at organizations around the world.

Natural disasters like Eyjafjallajokull are wildly expensive. The aviation industry was just getting back on its feet from the worldwide economic meltdown when the ash cloud occurred. Around 100,000 flights were canceled after the majority of governments in Europe closed the airspace, costing the aviation industry hundreds of millions of dollars.

The total cost of this disaster is impossible to quantify. Wisely, airlines played it safe. "Volcanic ash is a silica-based material and highly abrasive. It is capable of causing major damage to aircraft through clogging engines and causing them to flame out, and by scouring windscreens so as to make them opaque," says Professor Bill McGuire, director of Aon Benfield UCL Hazard Research Centre and a leading volcanologist. "Over the past few decades there have been more than 80 encounters between civil aircraft and ash clouds, resulting in a number of situations where crashes have only narrowly been avoided."

The thought of ignoring the risk was inconceivable. "Just one incident of major engine failure, let alone an accident caused by the ash, would have left the airlines and aviation regulators with a heavy responsibility and a legacy of distrust amongst the public, possibly for years to come," said Nick Pidgeon, Ph.D., professor of psychology at Cardiff University, in an article in Insurance Journal.

Putting the Consequence of Natural Disaster into Perspective

The eruption of Eyjafjallajokull is just one example of unanticipated events that can cause business interruption and underscore the advantages of business continuity planning. The devastating earthquakes in Haiti, Chile and China; tornadoes that routinely batter the U.S. Midwest; tropical storms and hurricanes that torment the Gulf Coast, and now an oil spill; tsunamis; pandemics of infectious disease like H1N1 and SARS—they all present serious threats to business continuity.

So how do you protect your business in the event of a catastrophe that can happen without notice and bring any number of repercussions?

One way is to follow Aon's four-step survival guide for business interruption. "There is an upside for firms that invest in rigorous business continuity planning," says Stephen Cross, CEO, Aon Global Risk Consulting. "They will have examined alternative ways of providing their product or service and will come out the other side of a lengthy disruption in a better position than those who haven't."

Here are the step's Aon's Cross and other experts outline for local and global businesses of all sizes:

Step 1: Do Your Homework. Build a solid foundation for business continuity.

Any solid business interruption plan begins with research and a thorough knowledge of how location and the associated natural and human-made challenges can affect your ability to produce and deliver products and services.

Start by understanding your exposure to potential natural crises. Do you have facilities in an earthquake zone? Could you be affected by flooding? Could a hurricane or tornado disrupt your supply chain?

What about the temperament of the regions in which you operate? If you conduct business in a politically explosive geography, obtain detailed information about the potential for area conflicts and the ramifications for your business. (See "Recalculated risk" on page 11).