This refers to something which happens on the grandest scale possible on earth. This includes apocalypse, major war etc.
We cannot allow you to continue research on this weapon, it would cause a disaster of biblical proportions.
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Something that happens on such a huge scale it could be biblical- ie in the bible. So when Jesus walked on water or performed one of other many miricles they are considered on bibical proportions, after all they're in the bible.
This event is of biblical proportions!
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When project management goes any direction other than the intended.
E.g. 16 expensive consultant engineers discussing where to put the "Hazardous Materials" label on Little Boy.
Engineer 12#: "I think we should put it at the top since this is the first thing the enemy sees."
Paying stakeholder: "This is a circle jerk of biblical proportions"