we need full explanation , else don't answer also Give answer to all parts.

XYZ limited is an Airline company in India. It isonly the company whose books was positive till last quarterin terms of profits. Cash Flow was positive and was building cash reserve to face any challenges. Its share price was at highest & its market capitalisation is on all time high. It was full -service network carrier operating domestic & internationally.

Due to heavy demand in airline traffic and old aircrafts, it has ordered many new aircraft and was replac ing old aircraft with the new one. It has borrowed funds for new aircraft for which instalment is due in September,20.

Suddenly there arise a pandemic situation of virus in the country & across globe where virus had infected millions of people across globe & taken death of almost lakh of people. There was no medicine to cure such pandemic problem.

Due to spread of virus, all the airline was shut. It remained shut for almost 3 months. During these 3 months, Airline company revenue was almost Nil while it has to incur huge cost on salary payment. Its share price plunges suddenly by 40%. It had downsized its team of employees, delayed payment of staff and maintenance, deferred lease payment of aircrafts. However due to downsizing many talented employees left the company. Change the structure of Employee salary with 30% variable & balance fixed and gaveemployees leave without salary. Also, all its recoverable amounts from customers remained outstanding & itis facing cash crunch.

Now after 3 months, airlines have started working. However, it is going to take at least couple of years to come back to 50% of what they were before spread of pandemic both domestic & international operations.

If you recall the previous instance of 9/11 and what happened subsequent to that, it took a lot of time for the aviation industry to come back. It is not only how fast XYZ starts its normal operations but even afterthatvisas not being allowed, travel not being allowed, airlines not being allowed. Even after all these are allowed, there will be apprehension. The first is the economic aspect.

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Will people travel, either for leisure oron business? The answerisclearlyno. It will take a longtime for this to happen. Then the question is of people going out to destinations and being apprehensive. How many flights will you operate?

Also, a plane on the ground costs the airline enormously with 50% of them have been takenonlease. So even while they are on the ground the lease rentals are being paid. It is not only employees who are being unproductive but also the machines. So, both men and machines are taking a heavy toll.

Now when the flights are put back into operation, the concept of social distancing is be imposed by government on XYZ. It is only flying one-third of capacity & due to it fares are very high to sustain its operations.

India being a price-sensitive market. It is again witnessing era of the 1940s and the 1950s where onlytheelite could afford to travel.

Analyst believe that company will take at least take 5-6 years to revive itself.

Another important aspect which has come due to this pandemic situation is that lot of people have found alternative means of working, especially with videoconferencing & other digital platforms. So, it is going to bea major change as travelling will be less & will impact air traffic.

Descriptive Questions

2.1 Explain type of risks which XYZ limited is facing apart from Pandemic situation. (8 Marks)

2.2 In what ways Enterprise Risk Management can be classified. Explain with referenc e to above case study. (4 Marks)

2.3 According to Paul Hopkins, risk is divided in what categories. Explain with reference to abovecase study. (3 Marks)

Multiple Choice Questions Choose the most appropriate answer from the answer options.

2.4 XYZ limited is facing with what kind of Risk.

(A) Operational Risk

(B) Uncontrollable Risk

(C) Financial Risk

(D) Liquidity Risk

2.5 The aim of XYZ ltd in such pandemic situation would be to:

(A) Maintain unsystematic risk at the desired level

(B) Maintain systematic risk at the desired level

(

C) Cost to be kept minimum

(D) Both (A) & (B) of the above

2.6 Which of the following statement is false?

(A) Risk caused by Internal factors arises during the ordinary course of business is to be borne by Company.

(B) Risk caused by External factors arises during the ordinary course of business are not integrally related to business.

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(C) Risk caused by outright default due to inability or unwillingness by customer to pay or honour its commitment is credit risk.

(D) Risk where change in market interest rate might adversely effect the Net Interest Income Earningis financial risk.

2.7 Risk consequences currently faced by XYZ limited:

(A) Insignificant

(B) Minor

(C) Catastrophic

(D) Moderate

2.8 Which are the risks which XYZ limited is faces while facing Pandemic situation of virus:

(A) Human Resources risk in terms of poor morale & talent retention

(B) Operational risk in terms of inability to replace old aircraft with new ones

(C) Finance & accounts risk in terms of negative cash flow

(D) All the above (5 x 2 Marks = 10 Marks)