7-80 The risk that many borrowers in a particular country fail to repay their loans is

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Sovereign risk refers to the risk that a country's government may default on its financial obligations, including the repayment of loans. If many borrowers in a particular country fail to repay their loans, it could signal economic instability and increase the likelihood of a sovereign default, thus increasing sovereign risk. Credit risk refers specifically to the risk of a borrower defaulting on their loan, while currency risk, liquidity risk, and interest rate risk are all different types of financial risks.

7-80 the Risk That Many Borrowers in a Particular Country