Exam 2016-FRR Topic 2 Question 81 Discussion

When operating in a heavily traded currency, a commercial and retail bank's treasury focuses on cover operations to mitigate risks. A cover operation involves taking actions to offset potential losses from the bank's business activities by hedging these risks in the market. This ensures that any adverse movements in exchange rates or interest rates do not negatively impact the bank's financial position.
References: No specific reference found in the document for this question. The provided answer is based on typical operations of bank treasuries related to risk management.