Contagion Containment
BCG | Round 2 | Non-profit
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CONTAGION CONTAINMENT B E H AV I O R A L
INTERVIEW
BCG | Round 2 | Non-profit QUESTION:
Prompt: 1 . Te l l m e a b o u t
Your client is the International Olympic Committee (IOC), and the Summer Olympics are a couple a failure.
months away. A viral outbreak has occurred in a country across the globe and has begun to spread.
There is a real threat that the outbreak reaches pandemic levels and arrives in the host country within a 2. How have you
few weeks or months. Should the outbreak reach the host country, there is an 80% probability of a low- used data to
severity outbreak and a 20% chance of a high-severity outbreak. The modern Olympics, which date to
bring clarity to
an ambiguous
1896, have been cancelled previously only during wartime. Recently, the Rio Games in Brazil went on problem?
as scheduled in 2016 despite the outbreak of the Zika virus.
Because countries bear a large cost to host the Olympics, the IOC has decided to be particularly
cautious about the host country bearing significant unexpected costs. However, the IOC is unsure
whether to cancel or move forward with the Olympics and would like your firm’s insight on how they
should proceed.
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Clarifying Information: Provide only if asked.
1. Objective: Make a decision on whether to proceed or not by considering minimizing unexpected economic costs to host country while
maximizing IOC revenue.
2. Timeline: The IOC must make a decision today regarding the event.
3. The IOC: The International Olympic Committee (IOC) is a not-for-profit independent international organization that is committed to
building a better world through sport. While the IOC may consider input from the host country, the IOC is the decision-maker.
4. The Virus: Like the seasonal flu, this virus is an infectious respiratory illness. It can spread from person to person through droplets in
the air from an infected person coughing, sneezing or talking. However, unlike the flu, no vaccine currently available. Research is being
conducted but the timeline is uncertain.
5. Host Country: The host country is a developed nation. GDP is 3 trillion.
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Framework Guidance:
Note: There are many possible alternatives to this framework. These are only provided as possible suggestions.
Factors for IOC Financial Non Financial
• Sources of revenue: sponsorships, tv rights, • Potential lives lost
ticket sales, licensing • Relationship risk with current and future host
Proceed • Outstanding costs: promotion, unfinished countries
construction • Public relations risk
• Risk of lack of athlete participation
• Sunk costs (and that they are irrelevant) • Impact on athletes from no competition
Cancel • Existing insurance policy to soften blow and • (Un)happiness of attending Olympics
recoverable cost • New precedent set
How to Move Forward:
Key insights include: the types of costs that a host country may bear with an epidemic; quantifying impact of decision and irrelevance of sunk cost; and, impact on
human lives.
To move forward, the interviewee should call the potential financial repercussions of the decisions to cancel or proceed.
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Question 1
• What are the sources of revenue for the IOC for each Olympics? What would they keep/lose if they elected to cancel
the Olympics?
Exhibit or Question Guidance:
Have candidate provide ideas for sources of revenue before providing the exhibit. After their initial thoughts, provide the precise numbers for
each category. A strong candidate will provide some ideas about what percent of each category might be secure regardless of
cancel/proceed decision based on potential contract clauses.
• Sponsorships (2.1 billion) are through contractual agreements. 75% of contracts have already been signed and the IOC will keep half of
the already secured funds if the event is cancelled.
• Ticket sales (1.8 billion) are non refundable. 85% of tickets have already been sold.
• Licensing (190 million) are for use of the logo. The IOC will retain the entire amount.
• TV rights (3.9 billion) are on a contract. A clause in the contracts permits that you keep 40% of the contract agreement.
Solution:
If proceed, revenue = 2.1B + 1.8B + .19B + 3.9B = 7.99 billion can rounded to 8 billion, if asked
If cancel: revenue = (2.1B*.75*.5) + (1.8B*.85) + (.19B) + (3.9B*.4)
= 787.5M + 1.53B + 190M + 1.56B = 4.0675 billion can be rounded to 4 billion, if asked
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EXHIBIT 1
IOC Revenues for Upcoming Olympics
TV rights
Licensing
Ticket sales
Sponsorship
$- $1 $2 $3 $4 $5
Billions
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Question 2
• What percent certainty around the virus making it to the host country would the IOC need in order to
proceed with the Olympics?
Exhibit or Question Guidance:
The probability of the virus reaching the host country at all is uncertain.
IOC
Expected value of loss * x = Expected value of gain * (1-x)
$4 billion * x = $8 billion * (1-x)
4B*x = 8B – 8B*x
12B*x = 8B
X = 2/3 = 66% to be indifferent about hosting relative to the virus arriving
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BRAINSTORMING
What are the other risks to IOC associated with the IOC’s decision to proceed or not?
Brainstorming Guidance:
Note: This is just one possible set of categories and answers. Many more are possible, and interviewers should assess both the volume and relevance of answers.
External (to IOC) Internal (to IOC)
• Impact to host country • Reputational risk to IOC
• Lives lost • Relationship risk with current and future host countries
• Fan dissatisfaction
• Impact on athletes
Best candidates display:
Creativity in risks identified and will pull in analysis from question 1
Strong structure – other possible frameworks include: Current vs. Future, Known vs. Unknown
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Question 3 (optional)
• The client wants to understand the economic impact of a potential outbreak on the host country because of the
relationship risk with this host country and future ones. What factors would you consider?
Exhibit or Question Guidance:
A strong candidate should have a solid framework to work through this mini-brainstorm:
• Healthcare costs: efforts to contain or limit outbreaks (i.e. tracing contacts, implementing quarantines, and isolating infectious cases),
increasing demand for consumables: medical supplies, personal protective equipment, and drugs.
• All other sectors of the economy—agriculture, manufacturing, services—face disruption, potentially leading to shortages, rapid price
increases for staple goods, and economic stresses for households, private firms, and governments.
Once the candidate has identified the factors of GDP that might be impacted, tell them that:
• If the pandemic spreads to the host country, economists have predicted a low-severity pandemic could reduce GDP by up to 0.05%
percent, whereas a high-severity event could reduce GDP by 0.2% percent.
• When asked, tell the candidate to assume the annual GDP of the host country is 3 trillion.
Low-severity outbreak GDP impact = 0.05% of 3 trillion = 1.5 billion loss
High-severity outbreak GDP impact = 0.2% of 3 trillion = 6 billion loss
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CONCLUSION
The IOC must make a decision today and would like to hear your recommendation.
To conclude, the interviewee should provide the following:
Recommendation:
• Go or no go are both acceptable answers, but the candidate should have a clear argument why.
Risks:
• Financial risks should be outlined.
• Other non-financial risks should be noted: impact on athletes, impact on human lives, etc.
Next Steps:
• Recommended next step should clearly map to a risk identified.
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INTERVIEWER FEEDBACK FORM Case Name _________________________ Interviewer ___________________________
Case Book ____________________ Case Type ____________ Difficulty ____________
Case Execution:
❑ Clarifying Questions + Framework
❑ Good Questions
Feedback:
1 2 3 4 5
❑ Structured
❑ MECE
❑ Creativity
❑ Exhibits + Quantitative Ability
❑ Accuracy Feedback:
❑ Speed 1 2 3 4 5
❑ Insights Presented
❑ Errors / Guidance Needed
❑ Brainstorm + Conclusion
❑ Creative & Structured 1 2 3 4 5 Feedback:
❑ Good Business Judgment
❑ Recommendation Strength
❑ Presence & Non-Verbal
❑ Confidence
❑ Poise / Posture
Feedback:
1 2 3 4 5
❑ Clear & Concise
❑ Body Language
❑ Coachability
Total: _____ / 20
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EXHIBIT 1
IOC Revenues for Upcoming Olympics
TV rights
Licensing
Ticket sales
Sponsorship
$- $1 $2 $3 $4 $5
Billions
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