Cross Border Risk :

Another risk which is exclusively applicable to foreign exchange transactions is the cross border risk. This type of risk is also known as country risk/sovereign risk. Foreign Exchange markets operate on 24X7 basis almost continuously. Obviously, all centers do not operate simultaneously and hence results in time zone difference and that leads to risks associated with various centers which is popularly called as cross border risk.

Country Risk:

It is a risk in which a foreign entity, private or sovereign may be unwilling or unable to fulfill its foreign obligations for reasons beyond the usual risks, in respect to all lending and investments.