Is Settlement risk a financial risk?

I though it is, but apparently it is not.

Can someone elaborate?

No it is not.

Sovereign risk arising from ability (not willingness) to pay is financial risk

I agree that it definitely is and I got it wrong but I disagree.

If you are expecting settlement of something and a cash inflow that doesn’t happen, that is financial risk and would affect cash balances

Settlement, Tax, and Accounting risks are non-financial.

By that logic almost every risk is financial. Settlement is NOT a financial risk.

CFA way: not financial.

My opinion:

If the counterparty is not able to settle timely because of an operational issue: not financial since it caused operations risk.

If the counterparty does not pay because they are illiquid or insolvent: financial, since it has to do with their creditworthines. In this case it would be a consequence of credit risk, which is clearly financial, even in the curriculum.

email that to cfai