CFOs Are Flying Blind on Counterparty Risk as Cross-Border Uncertainty Spikes

Cross-border commerce has long been constrained by cost and its cousin, speed. That hierarchy, however, is increasingly shifting toward a new axis: counterparty risk.

In today’s fragmented global economy, many chief financial officers are observing that risk has overtaken cost as the dominant concern. And the risk that a counterparty will fail to perform, whether by default, delay, regulatory entanglement or even fraud is no longer a variable that can be neatly priced into a contract.

Historically, CFOs have been able to take much of the risk out of counterparty risk by hedging through contracts, insurance and diversification. But today’s dynamic geopolitical situation is making that risk harder to quantify or price, and in some markets even to navigate at all. Ships attempting to cross the Middle East, for example, are increasingly falling victim to scams involving crypto payment for safe passage, underscoring the importance of understanding just who your counterparty is.

At the same time, macroeconomic volatility has increased the likelihood of financial distress among trading partners. Rising interest rates have tightened credit conditions globally, particularly in emerging markets where many supply chains are anchored. Even well-established counterparties are more vulnerable to cash flow disruptions, making performance less certain.

This shift is compelling some CFOs to rethink not just how they manage risk, but where in the financial stack that risk should be addressed. A growing number are looking beyond traditional instruments toward embedded finance as a way to restore predictability and control.

See also: As Cross-Border Payments Splinter, Firms See Interoperability As Way Out

Why Counterparty Risk In Cross-Border Is Getting Harder for CFOs to Price

In periods of global stability, managing cross-border trade meant optimizing logistics, currency exposure and cost. But today’s geopolitical tensions, sanctions regimes and shifting trade alliances have introduced discontinuities that historical data cannot fully capture. A supplier that was considered low risk last quarter, for example, may now face export restrictions, currency controls or liquidity constraints.

While traditional risk mitigation levers are still in play, they are increasingly proving to be insufficient for CFOs looking to actively price and reduce risk at the point of transaction. After all, traditional tactics like diversification can reduce exposure, but they also introduces complexity and operational overhead. Insurance can transfer some risk, but coverage is often incomplete and claims processes can be slow, while contracts can specify penalties for non-performance, but enforcement across jurisdictions is uncertain.

Part of the problem lies in the financial infrastructure that underpins cross-border trade. Many processes remain fragmented, manual, and reliant on intermediaries. Payments, financing, compliance checks and documentation often occur in separate systems, creating gaps where risk can accumulate.

For example, a company may extend payment terms to a supplier based on outdated credit assessments, only to discover that the supplier’s financial position has deteriorated. Or a shipment may be delayed because documentation does not meet the requirements of a particular jurisdiction, triggering penalties and disrupting cash flow.

One of the most challenging aspects of the current environment is the delay between the accumulation of risk and its manifestation in financial outcomes. Defaults, payment delays and disputes do not occur immediately when conditions deteriorate. They emerge over time, often triggered by secondary effects such as liquidity constraints or regulatory changes.

At the same time, the velocity of trade is increasing. Digital payment systems and supply chain platforms have compressed transaction timelines, leaving less room for caution. Deals are executed faster, often with thinner margins for error. This combination of greater reach, higher speed and lower transparency is redefining the risk landscape in real time.

See also: B2B’s New Battlefield Is Everything Before the Button

Embedded Finance as a Control Layer

As counterparty risk becomes more difficult to manage, it is leading to a reconfiguration of organizational priorities. Functions that were once considered back-office, such as credit analysis, compliance and legal oversight, are moving closer to the center of strategic decision-making. CFOs and treasurers are taking a more active role in evaluating trade relationships, working alongside procurement and operations teams to balance growth with resilience.

This is where embedded finance enters the conversation. By reducing uncertainty, improving visibility and aligning incentives, embedded finance solutions can address the root causes of counterparty risk rather than merely compensating for them.

Findings in “Buy, Don’t Build: The Next Wave of Embedded Finance,” the November 2025 Business Payments Tracker Series report from PYMNTS Intelligence in collaboration with WEX, reveal that 72% of B2B buyers say they are more loyal to suppliers that offer embedded payment methods.

“CFOs are in the business of control,” Jeff Feuerstein, senior vice president of Paymode Product Management and Market Strategy for Bottomline, told PYMNTS in an earlier interview, adding that the ability for technology to “take care of decisions rather than just provide insights” represents a change in how finance leaders operate.

In effect, embedded finance transforms counterparty risk from a static assessment into a dynamic process. Instead of relying on periodic reviews and historical data, companies can make decisions based on current conditions.

The attraction for CFOs of that thesis is supported by separate data in the PYMNTS Intelligence report “Time to Cash: A New Measure of Business Resilience,” which introduced a new metric for agility called Time to Cash. The research found that the legacy era of closing the books and looking backward has given way to a new paradigm, a living cash flow system shaped by 12 operational levers spanning the four dimensions of receivables efficiency, payables control, operational workflows and financial visibility.