Question

You now know that risk is inherent in business. Every company faces the task of managing the risks associated with its finances. Being able to effectively manage risk is a competitive advantage.

Consider the Walt Disney Company (DIS)

1. List of some of the types of risk Disney faces

2. What is the biggest risk(s) it faces? How can they mitigate that risk?

Answer 1

Risks faced by Walt Disney Company (DIS):

1. High Cost of operations

2. Concentration of Revenues in the US

3. Increase in the costs of pension and postretirement medical, along with other benefits might reduce the profitability

Biggest Risk:

Change in consumer consumption pattern and technological changes might affect the demand of the entertainment products that Disney is into. This changing patterns have already impacted the business model for distribution decisions.

Risk Mitigation Techniques:

Digitization of operation in order to lower costs & utilize technology

Target expanding in other countries, specifically developing countries

Investing in technology and Research & Development