Miller's instructions for Stone are a blunt but effective way of controlling the damage. The actions may seem drastic, but they will go a long way toward mitigating the risk. Wainwright's problem cannot be easily hedged away. Doing nothing may be the best option, particularly considering these are not problems the company can address without a lot of time and negotiation. However, the advice to Hatchett was bad. If Extralatian currency falls, currency in neighboring countries is unlikely to rise, and may fall in sympathy, or be affected by the same political issues. As such, a better hedge would be to attempt to sell those neighbors' currencies forward before they fall. The strategy isn't perfect, but it could counteract some of the risk. As the instructions currently stand, Hatchett would be doubling down on her bet, which exacerbates the risk rather than mitigating it |
