Which of the following best describes cross-border lending risk management with regard to currency risk?

• A. Assess political/regulatory risk, currency exposure, use FX hedges, and plan funding; understand collateral and enforcement across jurisdictions.
• B. Ignore currency exposure; hedge using only local currency.
• C. Rely solely on collateral value without risk assessment.
• D. Avoid hedging and assume funds are always available.

Answer: (B)