Provide at least one paragraph response to each of the following Discussions

Discussion 1

I did a walkthrough of the Worcester County Jail and its outside perimeter. For the most part, the jail has the basic security equipment to prevent anyone from getting inside that is not authorized. The outside perimeter has a wired fence with bob wire at the top of it, enclosing in the recreational yard and entrances into the back of the jail. Having the fence seems like a good security device but it does not have an alarm or sensor to detect movement. It is also secured with a padlock. All someone has to do, is come at night time in dark clothing and cut the lock with bolt cutters. Improvements definitely are needed on the perimeter.

As far as inside the jail, that needs the most work. The threat for this project is the inmates and detainees. The survey covered how secured Worcester County Jail is but not the specific details needed to prevent a threat from occurring by an inmate or detainee. On the criticality scale, the possible threat from inmates and detainees and the lack of security practices would be a 3. The harm would be damaging and we would need to utilize outside resources. It would also damage the jail’s reputation and confidence if a riot was to occur or an officer was injured by an inmate or detainee. If the threat was large enough to cause damage to the jail itself or water and power lines, thousands of dollars would have to be spent to repair what was destroyed.

There is a very high degree (5) that a threat can occur at the Worcester County Jail by the inmates due to the current security practices and lack thereof. Any given day, a situation can occur where an officer has to respond to an inmate acting out or not following directives. Incidents such as use of force or physical altercations take place several times a month. The chance of a major event such as a riot occurring is low (1). If one was to occur, it would take place during the summer months when the jail is the hottest due to no air conditioning.

The vulnerability degree in total would be a 19. The weaknesses of Worcester County Jail can be very threatening to the officers and jail itself. The weaknesses of the jail is what gives the inmates and detainees the power that have to pose as a threat. The total risk (3x5x19) would equal 285.

Discussion 2

The Target Environment Security Survey was completed via interview of a former DPS employee. San Manuel has several treat and security problems. San Manuel borders San Bernardino, CA which is ranked the most dangerous city in California and third most dangerous city in the country (CBS, 2019.) Arrest are made daily for panhandling, prostitution, narcotics offenses, theft, car burglaries, vehicle theft, robbery, counterfeit money, laundering, loitering, and table games cheating.

According to the Qualitative Vulnerability Rating Scale, San Manuel would be an example of a very high rick for a facility because it has attractive targets a history of threats, inadequate security measures, and adversaries capable of exploiting the security weaknesses. An attach would include structural damage and operations would be severely hampered or completed stopped and assets contained within the facility would be destroyed (Vellani, 2007.)

All threats and threatener’s are not equal. Although most threateners are unlikely to carry out the treat, all threats must be taken seriously and evaluated. Incidents, circumstances, reactions or situations that can trigger a threat. With the casino atmosphere there are many incidents, circumstances and reactions that can trigger a threat. For example, if someone loses a substantial amount of money such as retirement or life savings, and/or if someone receives what they consider to be poor treatment or customer service then the threat can also become emotional. There are also precipitating stressors such as a wife or husband is angry at the casino because it allowed their spouse to gamble his paycheck away. The terrorist may have no direct relation to the casino itself, but nonetheless becomes a catalyst because they are against gambling and all the morally difunctional behavior associated with the casino. Many patrons at the casino are from the local area and are predisposed to criminal activity. There is also a mental hospital located down the street from the Casino, Patton State Hospital which borders some of the casino property. Something I would think about besides using the Risk Assessment Matric when assessing the threat would be the time of day and day of the week that has the highest customer activity. In this threat assessment the amount of causalities is very much corelated to the day and time.

Soft targets are crowded places that are easily accessible to large numbers of people and have limited security or protective measures in place making them vulnerable to an attack (DHS, 2018.) The biggest threat at this location to human life for both employees and patrons as well as the entire infrastructure of the casino would be the underground valet below the casino. Any patron can pull their vehicle up to valet. The vehicle is then driven into the underground parking below the casino floor. Valet does not conduct a vehicle search. A significant amount of ANFO explosives could level the two-story casino easily (Martines, 2020.) ANFO consists of Ammonium Nitrate (AN) with a blend of Porous Ammonium Nitrate and fuel oil (FO) (DYNO, 2020.) There are also locations around the casino that could be used as distraction threats prior to the main event, such as the adjacent parking structure. This threat distraction could attract first responders to the area and distract casino employees to include DPS from the main threat.

Quantifiable Risk Assessment

If the threat exploits vulnerability independent of probability then the harm of each asset would be serious. The Criticality score that I would give San Manuel is a 4. In the event a threat is carried out then it would cause extended down time and/or loss of ability to continue operations. It would compromise large amounts of service. The frequency in which the threat will exploit vulnerability is very low. In my opinion the probability would be 2-3 times every five years. The probability score I rate is 1 because it is probable. The vulnerability level is high. In the event a bomb is set off the impact it would have on humans is high (5), property impact is high (5), business impact is high (5), internal resources is high (5), external resources is high (5). The total vulnerability score would be 25.

Discussion 3

What does the recent economic history of Brazil tell you about the relationship between price inflation and exchange rates?  What other factors might determine exchange rates for the Brazilian real?

The recent economic history of Brazil indicates that price inflation and exchange rates are distinctly correlated. As shown in the article, if inflation increases the value of the currency decreases resulting in a decline of exchange rates. On the other hand, if inflation decreases, the value of the currency rises becoming more valuable, so the exchange rates go up. Over the years, Brazil has experienced economic issues and has had consistently high inflation rates resulting in the real depreciating against the U.S. dollar. Exchange rates are also effective by political and economic stability which is lacking in Brazil. In addition, Brazil’s unemployment rate averages 9.90 percent which makes them a less desirable market and may also be a contributing factor that determines exchange rates (Brazil Unemployment Rate, n.d.).

Is a decline in value of the real against the US dollar good for Embraer, bad for Embraer, or a mixed bag?  Explain your reasoning.

The decline in value of the real against the US dollar is mixed bag for Embraer. As the value of the real decreased from 1 real = $0.644 in 2011 to 1 real = $0.32 in 2017, Embraer stock prices surged to the highest prices since the 2008 recession. Although this was not good for the Brazilian currency it was good for Embraer. However, when the real depreciated against the dollar in 2008, Embraer had to take a $121 million dollar loss in revenue because they locked themselves into a higher real verse dollar exchange rate. In each of these cases the real declined in value but Embraer profited from it in 2017 but suffered in 2008. This shows how it can be a mixed bag.

What kind of exchange rate risks is Embraer exposed to?  Can Embraer reduce these risks?  How?

Embraer is exposed to both transaction and economic exposure. The company’s sales of the jets generate revenue along with the expenditures from the purchase of jet parts, are both impacted by currency exchange rates which allow for transaction exposure through foreign exchange rates. In order to reduce the transaction exposure, the company can hedge domestic currency against a stronger foreign currency (Kenton, 2020). Along with transaction exposure, the instabilities between the real and the dollar impact foreign exchange rates causing economic exposure. Economic exposure can be reduced through operational strategies or currency risk mitigation strategies (Hargrave, 2020). Operational strategies include diversification of manufacture facilities, end-product markets, and financing sources (Hargrave, 2020). Embraer should hedge the prices of manufactured jets to ensure they are buying parts to make the jets at a low price and selling them at a higher price when exposed to the internationally markets.

Do you think Embraer’s decision to try and hedge against further appreciation of the real in the early 2000’s was a good decision?  What was the alternative?

Embraer’s decision to try and hedge against further appreciation of the real in the early 2000’s was a risky decision. If there had been a safeguard in place to protect against depreciation, then the decision to locked themselves into a higher real verse dollar exchange rate would have been a better bet. Since there was nothing in place to protect against depreciation, it would have been a better decision for Embraer to buy flexible contracts instead of the fixed contracts. This would have allowed them to buy or sell when the real began to depreciate against the dollar.

Between mid-2014 and early 2015 the real depreciated significantly against the US dollar.  What do you think the impact was on Embraer?  Explain your reasoning.

As discussed in the article, the Brazilian real began to depreciate against the dollar in 2012 and declined significantly between mid-2014 and early 2015. However, this time the depreciation was actually a good thing for Embraer. When the real depreciated during this period, Embraer’s revenues increased when expressed in reals. Combined with the cut back on hedging, this resulted in a positive for the company as they were able to avoid additional losses and make a profit.

Discussion 4

What does the recent economic history of Brazil tell you about the relationship between price inflation and exchange rates?  What other factors might determine exchange rates for the Brazilian real?

It explains the relationship between price inflation and exchange rates. The value of Brazil’s currency was depreciating up until 2004. Low inflation, and strengthened fiscal policies afforded growth of the Brazilian economy. During this time the real appreciated against the U.S. dollar. In 2008, 1 real bought $0.65.  High inflation rates, political structures and employment rates impact Brazil’s market. Financial instability is a key factor in exchange rates. Embraer is the largest Brazilian exporter of high-value-added products, and contributes significantly to the country’s trade balance. In commercial aviation Embraer has 1,700 planes in operation and a client portfolio of more than 100 airlines in 60 countries. The company is also responsible for generating many highly skilled jobs, and as such has a significant positive impact on direct and indirect employment and income generation opportunities in Brazil and elsewhere. (Jewell, 2017)

Is a decline in value of the real against the US dollar good for Embraer, bad for Embraer, or a mixed bag?  Explain your reasoning.

I think it’s more of a mixed bag situation for Embraer. They guarded against future appreciation of the real by buying forward contracts which gave them the right to exchange currency in the future at a predetermined rate, this is called hedging. This at first was a great move on the part Embraer. However, when the 2008 crisis hit Embraer had locked itself into a high rate as the real decreased in value by 40%. In comparison, the fall of the value of the real in November 2008 led to a substantial bad currency loss for Embraer, an amount in the sum of $121m.

What kind of exchange rate risks is Embraer exposed to?  Can Embraer reduce these risks?  How?

As written, Embraer was at risk of experiencing fluctuation inflation rates. They may have been able to negotiate a clause locking in a fixed rate.

Do you think Embraer’s decision to try and hedge against further appreciation of the real in the early 2000’s was a good decision?  What was the alternative?

Yes I think it was a good idea, with a more balance an approach, including a clause which protected against depreciation.

Between mid-2014 and early 2015 the real depreciated significantly against the US dollar.  What do you think the impact was on Embraer?  Explain your reasoning. Inflation started to increase again while Brazilian currency was still. What was bad for the Brazilian currency, however, was good for Embraer, whose stock price rose. This lead to an increase in Embraer’s revenues when expressed in reals. Embraer SA’s financial fortunes are being tugged in opposite directions by the slide in the real and the Brazilian government’s budget woes, said the plane maker’s chief executive. (Ostrower, 2015)