Icelandic volcano, 1; global commerce, 0 Global businesses, including aiines, have had to develop plans, policies and procedures to handle @ wide range of potential {heats suchas the inteased risk of terorism, 2 wordwide influenza pandemic and global warming, just to mention a aw However, few global businesses or srnes thought to factor into ther planning scenarios a volcanic eruption in Iceland. Tis volcano has a funny name - Eyaaljokull — but its impact on global businesses vas no laughing matter. The eruption imposed the biggest airspace closure since the terrorist attacks in the US on 11 September 2001 When the volcano erupted on 14 April 2010, the plume of volcanic ash that spread across thousands of kilometres Clsrupted ait travel and global commerce for more than a week. The giant ash cloud affected most of northern and western European airspace, closing terminals from Dubin to Moscow. Because of te risk of possible engine shutdowns due to the ash cloud, aitines cancelled nearly 80 per cent oftheir fights across Europe. At the event's peak, only about 5000 out o “rormal 22 000 fights went ahead, According o estimates by the International Air Transport Associaton IATAI, anes were josing 200 milion ($290 milion) a day Gants had to cancel rumerous fights nto and out of Europe, and more than 15 00 ofits passengers wer affected costing (Gantas about S15 milion a day. An estimated 60 000 Australians were stranded ether in or on their way to Europe, and became Hresinlyfustrated by the uncertain duration ofthe delay. Other sities operating out of Austraion airports also affected by the event in Europe were British Aways, gin enti, Singapore Aiines, Thai Aways, Malaysia Ans, Etihad Airways and Fina ‘As thousands of fights were canclled across Europe, hundreds of thousands ofa ravers could not reach heir destination. WMelooure-besed cosmetics entrepreneur Gillan Frankin was trapped in Geneve, Switzerland, for neatly & week. Whia she fcknowledged that Goneva wos a beautiful lace to be stranded i, she aso said it was costing her’ fortuna. Although she ould keep in contact with her office in Melbourne via email, she missed important meetings in italy and in Melbourne. Also affected by the cancelled fights was Mrthin De Beer, vice prosidant of emerging technologies at Cisco Systems, who was due ;: iy 0 Oslo to ascuss te final aspects of Cisco's acquisition of Tandberg, a Nerwetian teleconferencing company. However, When his light was cancelled, he and Tandberg’ CEO, Fredrik Halvorsen, used their merged companies’ equipment to hold 2 | Virtual press conforence. JF _Other businesses, though, were not as lucky, especialy those with highvalue, highly perishable products such os Borie, tresh fish and lowers, and meticines and pharmaceuticals. Afican farmers, European fresh-paduce importers, and Hower waders from Kenya to the Netherlands found ther businesses threatened by the ar traffic shutdown, Even garment [ines sah scree ancora teen se Instence, BMW had to scale back its work hours, and had even prepared for possibly shutting down production, at its US sssembly plant in Georgia because it depended on trans-Atlantic fights to ring transmissions and other components from German factors It could be argued that some of the havoe that was created during the period was caused by poor planning and lita attention to risk management. For example, the International Organization fr Standardisation (ISO), which advocates the use $0 31000 risk management standards, suggested that organisations with a strong culture of risk management seemed to sTeve been better prepared. For example, United Parcel Service (UPS) quickly redirected air right hound from Asia to Europe fo \stanbul and then foadedt onto trucks fr delivery tots final destination Accoring to ISO, UPS was one ofthe exceptions, 5 most other organisations that were affacted just sat and wondered when the ash would blow away and aircraft would Fesume tying ‘Avolanic event ite the one that took place in Ieland does not appear to have been a isk tha the aifines and many other ampanies and governments around the werld had planned for. The eruption of Eyjafalajdkull and the Blanketng of much of Europe in an ash cloud isa great example of how an event with alow probability of occurrence, but severe cansequoncos f {Goes occur, tends to be overlooked by management when examining potential isk to comprate oboctves. Considering the Enon impact on evation of past volcanic erptons in Asia (for example, in Indonesia and the Phippines, it is surprising that Srines, abal comparies and governments had made ao plans to menage such a disuptionreatd risk. In an increasingly Global economy with high reliance on glbal business travel and just-in-time’ delivery of ash goods and eamponentsin many Pdusties, the need to plan for such events now seems quite obvious. Could & company even plan for this type of situation? If yes, how? if nt, waty not? Would gots be useful inthis type of situation? What types of goals might a manufacturing company lke BMW have In such a situation? How about a global ane? How about a smal flower grower in Kenya? ® What types of plans could companies use in his typeof situation? Explain why you tink these plans would be important 4 What lessons about planning can managers lear from ths ersis? 7 5 What other low probabily but severe-consequence events could there be? Is lobal warmina and climate chann ane