How do hedges help manage political or financial risk?
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How can we use tools like hedges of one sort or another or project portfolio diversification to help manage political or financial risks?
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Solution Summary
The 350 word discussion about hedging provides practical applications of the concept as it applies not only to financial markets, but also to everyday life.
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The strategy of hedging is used in many types of situations to try to protect against downside risk. Before the term was accepted in financial circles, individuals might not have considered house or car insurance as a hedge, but clearly insurance is a hedge against unknown or uncontrollable events. The same general statement is the goal in managing both political and financial risks.
Political risk insurance can be purchased as a result of the globalization of US companies. That type of insurance would offer varying coverage for the ...
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