HSBC has introduced an advanced credit ranking tool that can simultaneously run various ‘what if’ climate risk scenarios using Google Cloud technology. This innovative solution is designed to assess the potential impacts of climate change on its trading book, particularly in identifying capital requirements that may arise from rating downgrades and the default risk associated with credit products like corporate bonds.
By leveraging the vast computational capabilities of cloud technology, the tool can analyze billions of data points and deliver results in a matter of minutes. This rapid processing enables HSBC traders to manage their trading portfolios more effectively throughout the trading day.
Ajay Yadav, the global head of fixed income and digital strategy for traded risk at HSBC, commented, “The robust computing power provided by Google Cloud significantly accelerates our ability to execute complex simulations across various ‘what if’ scenarios, offering a comprehensive risk overview that enhances decision-making.”
The digital development team at HSBC successfully built this innovative tool in less than five months in collaboration with Google Cloud. The current focus is on integrating climate risk into the HSBC Risk Advisory tool, with plans for a proof of concept to be available in the upcoming months.