HSBC unveils new risk scenario tool to support risk and trading teams

HSBC has introduced the Risk Advisory tool, a solution aimed at helping the management of credit more efficiently for risk and trading teams.

According to Coverager, the new tool has been launched on Google Cloud and will enable HSBC’s traders and risk managers to run multiple ‘what if’ scenarios quickly and simultaneously in order to identity capital requirements necessary to cover potential rating downgrades and default risk of credit products.

The Risk Advisory tool uses the power of cloud computing – where billions of data points and regularly generated – with results provided to the user in minutes. This will HSBC traders better manage their trading portfolios.

Coverager noted that the bank’s market risk digital development team is now aiming to build on this innovation to involve the impact of climate risk on its trading book. The new tool would take into account the rating agencies’ ESG scores to assess where trading portfolios may be more potentially susceptible to climate change risk.

HSBC global head of fixed income and digital strategy for traded risk Ajay Yadav said, “The computing power of Google Cloud makes it much quicker to run complex simulations for many different what-if scenarios, providing a more holistic risk picture of trading for optimum decision-making.

“HSBC’s digital development team built this innovative capability in less than five months in collaboration with Google Cloud. The focus now is to take the HSBC Risk Advisory tool and integrate climate risk into it as a proof of concept, which we are aiming to make available in the next few months.

Google Cloud UKI financial services director Adrian Poole added, “Through our continued partnership, we are bringing the best of our cloud capabilities to help HSBC develop innovative data and analytics solutions in evolving risk areas. It’s exciting to see how financial services organisations like HSBC are embracing cloud technologies and building powerful solutions to empower faster and more informed decision-making, including for climate change-related risks.”

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