Which of the following is NOT a risk associated with interest rate swaps?

Operational risk is not typically associated with interest rate swaps in the same way that the other risks mentioned are. Interest rate swaps primarily involve the exchange of cash flows based on interest rates, and while it is possible for operational errors to occur in any financial transaction, this risk is more related to the efficiency and effectiveness of processes and systems rather than the nature of the swap itself.

In contrast, basis risk arises from the possibility that the interest rates or indices used in the swap do not move in tandem, impacting the effectiveness of the hedge. Credit risk pertains to the possibility that one party may default on its obligations, which is particularly relevant in swaps given the counterparty nature of these agreements. Sovereign risk refers to potential changes in government policy or economic conditions that could affect the ability of a counterparty to fulfill its obligations and is also a relevant consideration in the context of interest rate swaps, particularly if one party is foreign.

Thus, among these options, operational risk stands apart as not being an inherent risk specifically tied to the structure and nature of interest rate swaps.