A is correct. Counterparty exposure, in theory, can be almost completely neutralized as long as a sufficient amount of high-quality collateral, such as cash or short-term investment grade government bonds, is held against it. If the counterparty were to default, the holder of an open derivative contract with exposure to that counterparty would be allowed to receive the collateral.

B is incorrect. The company already has contracts with a handful of other firms that dominate the market for the rare derivatives asked in the question and thus diversification cannot be a solution.

C and D are incorrect. Cross-product netting would only reduce the exposure to one of the counterparties and purchasing credit derivatives would replace the counterparty risk from the individual counterparties with counterparty risk from the institution who wrote the CDS.