What is a lender of last resort and what does it do? If a central bank acts

Question:

What is a lender of last resort and what does it do? If a central bank acts as a lender of last resort under a fixed regime, why are reserves at risk?
Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...