BDC Company Limited is a Ghanaian company operating in Ghana. The company is expected to import 20 million barrels of crude oil in twelve (12) months. The prevailing exchange rate and price of crude oil are 1$/5.84GH¢and 54 dollars/per barrel, respectively. Further, BDC limited has secured a loan facility in Ghanaian cedis (to be repaid over the next 60 months) to partly finance the importation. Following the current global trends, it is anticipated oil prices will continue to rise, while the Cedi continues to depreciate over the coming months. Further, the Monetary Policy Committee (MPC) of the Bank of Ghana has just increased the policy or prime rate and Ghanaians will be going to the polls in twelve (12) months to elect a new president.

REQUIRED:

As the risk manager of BDC, write a report to the board outlining the various risks the company would be exposed to? Design appropriate hedging strategies for each risk type (Hint: Be specific with your hedging strategies).