The French bank BNP Paribas (rated AAA) intends to set up a subsidiary office in Cambodia (Cambodia has a sovereign credit rating of a single B by Standard and Poors). BNP Paribas has global assets of about US$2,400 billion (ranking it as one of the largest banks by assets last year). This local subsidiary will try to develop bank-lending business. The major market sector targeted by BNP Paribas is the restructuring of fixed-rate long-term loans to local Cambodian firms. BNP Paribas hope to have Cambodian assets of U$500 million within 2 years.

(a) Ignoring credit risk concerns discuss three key financial risk management issues that are of concern for BNP Paribas (250 words maximum)? (b) Explain, using key risk management products or techniques, how the bank could manage the three risks mentioned in (a). (250 words maximum)