Don't fix it

I sympathize with the desire to fix it, but on closer consideration it doesn't seem easy or worth it. Pulling out the hand and replacing it with another could be cool, but there are no plain hands on the market so you'd have to replace at least the whole arm plus hand or steal a hand from a good arm to fix this torso. Getting the hand out would probably damage the arm even if you manage to do it.

There are replacement arms for some colors on bricklink, but not a plain blue arm like this that I could find.

Replace it

The entire torso is available for less than $1 on BrickLink. This is the easiest path forward.

Or re-purpose it

As with all of LEGO the possibilities are limited to your imagination:

• maybe this soldier had his hand cut off and he's too poor to get a prosthetic.
• maybe this guy is holding a tray of drinks on his right arm during a battle. I don't have an arm with a missing hand to test this, but I hope something could be attached to it.
• maybe he had a tragic shaving accident and you can make a bloody scene about it.
• maybe this soldier put on the wrong uniform and you can live with 2 new matching arms from BrickLink that aren't entirely blue.
• maybe he's sticking his arm into a bee's nest or a hole in a dike.

So I hope you can see some way to get more value out of your "broken" torso than just tossing it. But sometimes we've gotten all of the life out of a piece and it is time to let it go.