Political Credit Risk, also known as Sovereign Risk, emerges from actions by a foreign government that can influence the management of a foreign business, affect control over its assets, and impact its capacity to meet financial obligations towards its creditors.
Transfer credit risk refers to the risk faced by a creditor, often in long-term contracts, due to a foreign debtor's inability to obtain foreign currency from the central bank despite being able and willing to pay. It is an aspect of international credit exposure.
