In June 2016, the United Kingdom (U.K.) held a referendum on whether the country should remain a member of the European Union (EU). A decision to leave the EU was commonly referred to as Brexit and many expert commentators predicted that a vote for Brexit would diminish U.K. economic growth. Suppose you were a small business owner in the United Kingdom around this time.

1. Ahead of the vote, as what kind of risk would you classify the possibility of a vote for Brexit? Why?
2. Do you think a strategy to reduce this risk through hedging or spreading risk within the U.K. economy would be successful? Explain your answer.