To mitigate counterparty exposure and reduce it to almost zero, ensuring that sufficient collateral is posted (often daily via variation margins and properly calibrated initial margins) is the most direct and effective method. Diversifying (Option B) spreads the risk but does not reduce the overall absolute counterparty exposure. Netting (Option C) reduces exposure but only up to the offset amount, meaning directional exposure remains. Purchasing credit derivatives (Option D) transfers the risk to another counterparty (the CDS seller), thereby introducing replacement counterparty risk and not reducing the overall counterparty exposure to zero.