Counterparty Risk and Country Risk are two variants of Credit Risk:
Counterparty Risk: This is a variant of Credit risk and is related to non-performance of the trading partners due to counterparty’s refusal and or inability to perform.
Pre–settlement risk: Pre-settlement risk arises when the counterparty goes bankrupt (or some other event which impairs the ability of counterparty honouring its obligatory payment) prior to settlement. In such a case, is the risk to the organisation 100% of the principal amount of the deal or just the replacement value of the original financial agreement?
Settlement risk: Settlement risk arises with respect to the settlement of a transaction. Example: one party buying USD against EUR. In a bi-lateral settlement, each party is obligated to honour their part of the transaction (their leg of the transaction). In settlement risk, the exposure is the entire value of the counterparty’s obligation.
Country Risk: This is also a type of credit risk where non-performance of a borrower or counterparty arises due to constraints or restrictions imposed by a country.