The correct answer is D.

CCPs use a combination of strategies to manage credit risk. These include:

Netting: This involves offsetting long and short positions against each other. It reduces the overall exposure of the CCP to credit risk by minimizing the total amount of outstanding obligations.

Variation Margin and Daily Settlements: Futures contracts are traded on a daily basis up to the maturity period. A member who is trading with the CCP will have to pay the CCP if the price of the traded commodity decreases, and vice versa. This ensures that losses (or gains) are realized and settled on a daily basis, reducing the risk of a large, unmanageable loss at the end of the contract period.

Default Fund Contributions: These are additional funds that members contribute to the CCP. They are used to cover losses that exceed the initial margin. The equity of a CCP is at risk only after exhausting the default fund contributions of all members. This provides an additional layer of protection against credit risk.

Choice A is incorrect. While Variation Margin and Daily Settlement are indeed strategies employed by CCPs to manage credit risk, they are not the only ones. These strategies involve adjusting the margin requirements based on changes in market prices and settling trades on a daily basis to limit exposure to credit risk.

Choice B is incorrect. Netting is another strategy used by CCPs, where they offset positive and negative positions or streams of payments against each other to reduce the total amount of outstanding obligations. However, this alone does not encompass all the strategies used by CCPs for managing credit risk.