Sovereign Risk
Definition
What is Sovereign Risk?
The risk that a government action, financial problem, or default harms an investmentAn asset or commitment of money made with the expectation of future income, growth, or both..
Example in practice
How This Looks in Practice
Capital controls or debt restructuringA significant change to a company's debt, operations, ownership, or organisation intended to improve viability. reduce payments to investors.
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Related Terms
Market Risk
The possibility of loss because broad market prices or rates move against an investment.
Risk TermsCredit Risk
The possibility that a borrower or issuer will fail to make promised payments or suffer a downgrade.
Risk TermsInterest-Rate Risk
The possibility that changing market interest rates will reduce an investment's value or income appeal.
MiscellaneousBusiness Day
A day on which relevant financial institutions and markets are open for normal processing.