DISNEY WORLD: MANAGING RISK DURING COVID-19
CASE STUDY SOLUTION
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SYNOPSIS
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Reeling from the economic effects of closures wrought by the coronavirus pandemic, the Walt Disney
Company (Disney) was at a pivotal junction. Even though COVID-19 case counts were rising in Florida,
the state government had announced numerous reopening measures and guidelines for theme parks and
resorts, indicating the state’s desire for businesses to start returning to “normal.” On May 21, 2020, the
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Universal Orlando Resort (Universal Orlando)—one of Disney’s major competitors in theme parks—
announced that it would be following the guidelines and reopening on June 5, 2020. Consequently, Disney
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had to decide when and if to reopen its Walt Disney World Resort (Disney World), also based in Orlando,
despite rising case counts.
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The case takes place on May 21, 2020, just after Universal Orlando’s announcement that it would be
reopening its theme park. This case requires students to identify all of the risks and opportunities related to
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the different alternatives, including Disney’s reputational, economic, operational, and social risks. The case
therefore provides an interesting setting within which to identify different types of risks, rank them against
stakeholder preferences, and implement risk-informed decision-making.
OBJECTIVES
• identification of the risks being faced;
• measurement of the risks (quantitative and qualitative); and
• deciding what, if anything, will be done to address the risks.
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. What factors led to Disney’s decision to close Disney World initially? Why is Disney considering
reopening Disney World? What has changed? Why is the decision whether to reopen Disney World (in
Florida) separate from the decision related to whether to reopen Disneyland (in California), Hong Kong
Disneyland, or Disneyland Paris?
2. What industries does Disney operate in? How were each of these industries affected by COVID-19?
What do investors consider when evaluating Disney and its different lines of business? Are there other
stakeholders that should be considered?
3. What risks does Disney face on an ongoing basis? What are the new risks that Disney is facing in early
2020? How do these risks depend on the line of business? Are these long- or short-term risks?
4. What major risks must Disney consider in deciding whether to reopen Disney World at this time?
(Please make a ranked list of the risks.) What major opportunities must Disney consider in deciding
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whether to reopen Disney World at this time?
5. How could you characterize each of the risks using qualitative metrics? Quantitative metrics? What
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would you say is Disney’s risk appetite and risk tolerance? How would reopening affect each of the
risk metrics?
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6. What would you decide with regard to reopening Disney World? Be prepared to support your answer.
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ANALYSIS
1. What factors led to Disney’s decision to close Disney World initially? Why is Disney considering
reopening Disney World? What has changed? Why is the decision whether to reopen Disney
World (in Florida) separate from the decision related to whether to reopen Disneyland (in
California), Hong Kong Disneyland, or Disneyland Paris?
The Case Solution Starts From page 6
,3. What risks does Disney face on an ongoing basis? What are the new risks that Disney is facing
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in early 2020? How do these risks depend on the line of business? Are these long- or short-term
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risks?
An important part of this analysis is to consider Disney’s risks in specific categories. For reference, one can
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consider the risk factors as defined in Disney’s 2019 annual report (an abbreviated discussion is quoted in
the case).11 Several risks straddle Disney’s enterprise, strategic, operational, financial, and reputational
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risks. These risks are prevalent on an ongoing basis and are not necessarily related to the risks posed by the
COVID-19 pandemic. One can also see that these risks are not mutually exclusive and that there can be
significant overlap, with the magnitude and importance of these risks changing over time.
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Enterprise
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• The main enterprise-wide risk that affects Disney World would pertain to any events that directly
threaten the survival of Disney itself. As seen above, many risks, if left unmanaged, could devolve to a
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situation where Disney would become insolvent or bankrupt, or develop a negative reputation,
adversely harming the company’s ability to remain a going concern.
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Strategic
• A misalignment in enterprise or BU-level strategy could adversely affect consumer demand.
Operational
The Case Solution Starts From page 6
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6. What would you decide with regard to reopening Disney World? Be prepared to support your
answer.
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Arguments for Reopening on the Same Day
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• Reopening on the same day could take the pressure off Disney World and essentially split the scrutiny
that it could have received if risks were not managed effectively.
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• Doing so would allow Disney to stay competitive and remain in visitors’ consideration set when
deciding to visit a theme park.
•
The Case Solution Starts From page 6
, EXHIBIT -1: THE MAJOR MEASURES TAKEN FOR COVID-19 IN THE UNITED STATES, THE
UNITED KINGDOM, AND FRANCE
Measures United States United Kingdom France
Containment The United States had a slow (1) The United Kingdom (1) French surveillance
and start in widespread SARS- incorporated COVID-19 testing system: According to the
surveillance CoV-2 testing. for severe acute respiratory COVID-19 surveillance
measures (1) The Trump administration infections and flu like illness protocol, physicians
announced a campaign to surveillances. Starting in early suspecting a COVID-19 case
conduct tests in retail store June, mass antibody testing was had to contact immediately
parking lots across the conducted. either the emergency hotline
country, but this was not (2) Individuals with suspected (SAMU-Centre 15), if the
widely implemented. mild symptoms of COVID-19 patient was seeking medical
(2) The National Institutes of (new continuous cough, fever, or attention from a general
e
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m
Sa
n
tio
lu
So
The Case Solution Starts From page 6
CASE STUDY SOLUTION
e
pl
m
SYNOPSIS
Sa
Reeling from the economic effects of closures wrought by the coronavirus pandemic, the Walt Disney
Company (Disney) was at a pivotal junction. Even though COVID-19 case counts were rising in Florida,
the state government had announced numerous reopening measures and guidelines for theme parks and
resorts, indicating the state’s desire for businesses to start returning to “normal.” On May 21, 2020, the
n
Universal Orlando Resort (Universal Orlando)—one of Disney’s major competitors in theme parks—
announced that it would be following the guidelines and reopening on June 5, 2020. Consequently, Disney
tio
had to decide when and if to reopen its Walt Disney World Resort (Disney World), also based in Orlando,
despite rising case counts.
lu
The case takes place on May 21, 2020, just after Universal Orlando’s announcement that it would be
reopening its theme park. This case requires students to identify all of the risks and opportunities related to
So
the different alternatives, including Disney’s reputational, economic, operational, and social risks. The case
therefore provides an interesting setting within which to identify different types of risks, rank them against
stakeholder preferences, and implement risk-informed decision-making.
OBJECTIVES
• identification of the risks being faced;
• measurement of the risks (quantitative and qualitative); and
• deciding what, if anything, will be done to address the risks.
The Case Solution Starts From page 6
,ASSIGNMENT QUESTIONS
1. What factors led to Disney’s decision to close Disney World initially? Why is Disney considering
reopening Disney World? What has changed? Why is the decision whether to reopen Disney World (in
Florida) separate from the decision related to whether to reopen Disneyland (in California), Hong Kong
Disneyland, or Disneyland Paris?
2. What industries does Disney operate in? How were each of these industries affected by COVID-19?
What do investors consider when evaluating Disney and its different lines of business? Are there other
stakeholders that should be considered?
3. What risks does Disney face on an ongoing basis? What are the new risks that Disney is facing in early
2020? How do these risks depend on the line of business? Are these long- or short-term risks?
4. What major risks must Disney consider in deciding whether to reopen Disney World at this time?
(Please make a ranked list of the risks.) What major opportunities must Disney consider in deciding
e
whether to reopen Disney World at this time?
5. How could you characterize each of the risks using qualitative metrics? Quantitative metrics? What
pl
would you say is Disney’s risk appetite and risk tolerance? How would reopening affect each of the
risk metrics?
m
6. What would you decide with regard to reopening Disney World? Be prepared to support your answer.
Sa
n
tio
lu
So
ANALYSIS
1. What factors led to Disney’s decision to close Disney World initially? Why is Disney considering
reopening Disney World? What has changed? Why is the decision whether to reopen Disney
World (in Florida) separate from the decision related to whether to reopen Disneyland (in
California), Hong Kong Disneyland, or Disneyland Paris?
The Case Solution Starts From page 6
,3. What risks does Disney face on an ongoing basis? What are the new risks that Disney is facing
e
in early 2020? How do these risks depend on the line of business? Are these long- or short-term
pl
risks?
An important part of this analysis is to consider Disney’s risks in specific categories. For reference, one can
m
consider the risk factors as defined in Disney’s 2019 annual report (an abbreviated discussion is quoted in
the case).11 Several risks straddle Disney’s enterprise, strategic, operational, financial, and reputational
Sa
risks. These risks are prevalent on an ongoing basis and are not necessarily related to the risks posed by the
COVID-19 pandemic. One can also see that these risks are not mutually exclusive and that there can be
significant overlap, with the magnitude and importance of these risks changing over time.
n
Enterprise
tio
• The main enterprise-wide risk that affects Disney World would pertain to any events that directly
threaten the survival of Disney itself. As seen above, many risks, if left unmanaged, could devolve to a
lu
situation where Disney would become insolvent or bankrupt, or develop a negative reputation,
adversely harming the company’s ability to remain a going concern.
So
Strategic
• A misalignment in enterprise or BU-level strategy could adversely affect consumer demand.
Operational
The Case Solution Starts From page 6
, e
pl
m
Sa
6. What would you decide with regard to reopening Disney World? Be prepared to support your
answer.
n
tio
Arguments for Reopening on the Same Day
lu
• Reopening on the same day could take the pressure off Disney World and essentially split the scrutiny
that it could have received if risks were not managed effectively.
So
• Doing so would allow Disney to stay competitive and remain in visitors’ consideration set when
deciding to visit a theme park.
•
The Case Solution Starts From page 6
, EXHIBIT -1: THE MAJOR MEASURES TAKEN FOR COVID-19 IN THE UNITED STATES, THE
UNITED KINGDOM, AND FRANCE
Measures United States United Kingdom France
Containment The United States had a slow (1) The United Kingdom (1) French surveillance
and start in widespread SARS- incorporated COVID-19 testing system: According to the
surveillance CoV-2 testing. for severe acute respiratory COVID-19 surveillance
measures (1) The Trump administration infections and flu like illness protocol, physicians
announced a campaign to surveillances. Starting in early suspecting a COVID-19 case
conduct tests in retail store June, mass antibody testing was had to contact immediately
parking lots across the conducted. either the emergency hotline
country, but this was not (2) Individuals with suspected (SAMU-Centre 15), if the
widely implemented. mild symptoms of COVID-19 patient was seeking medical
(2) The National Institutes of (new continuous cough, fever, or attention from a general
e
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Sa
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tio
lu
So
The Case Solution Starts From page 6
