Answer the following questions in brief: 'Cross Border Risk' and 'Currency Risk' in relation to international banking business.

Answer 3(a) 'Cross Border Risk' and 'Currency Risk' Cross Border Risk: The Cross border risk arises on account of trade and investment activities between two or more countries. This is one of the major risks the international banks face. This type of risk also called as country risk. Currency Risk: When an international trade and/or financial transaction take place, it would result in a currency deal. In view of the additional deal (involvement of foreign currency) a new risk arises called currency risk. Two or more than two currencies (in case of cross rates) are involved and due to the market fluctuations the exchange rate (price) of the currencies results in a risk called "foreign exchange risk" as well.