The umbilicus opens to the urinary bladder in the fetal horse, and this opening usually closes before birth. In some individuals it remains open after birth - a condition called a patent urachus. These foals will dribble urine from the umbilicus. This condition can lead to infection, and warrants a veterinary examination. They are fairly common in foals, and can be present at birth or occur within a few weeks after birth.
Many conditions can cause or worsen an umbilical hernia.
It is always best to allow the umbilical cord to break naturally when the foal is born, because manually breaking the cord can cause a hernia. Never pull on the umbilical cord while it is still attached to the abdomen. Allow it to break naturally if possible, but if it becomes clear that it will not break on its own, find the natural indentation, approximately 2 inches from the abdomen. Grasp the cord on each side of the indentation and twist. The cord should easily break apart.