Keep pulling the thread on Norges Bank Investment Management.
A stress test scenario by Norges Bank Investment Management, called "fragmented world," models a potential loss of 37% for the fund.
In the last 12 months, Norges Bank Investment Management has lent securities worth almost 2,000 billion Norwegian kroner.
In response to worsening credit quality at Credit Suisse, Norges Bank Investment Management reduced its securities lending exposure to the bank from 60 billion kroner to 600 million kroner before its collapse.
Lars Kvikstad Sørensen highlights significant concentration in the AI technology supply chain, with ASML producing manufacturing machines, TSMC producing chips, and Nvidia designing them.
A stress test by Norges Bank Investment Management found that a sharp correction in AI valuations could cause the fund to lose up to 31% of its value, or approximately 650 billion US dollars.
The CEO of Norges Bank Investment Management, Nikolaj Tengen, believes the geopolitical risk landscape has fundamentally changed and become more complex, with new interconnections between AI, cyber, and geopolitical risks.
Norges Bank Investment Management plans to integrate more AI into its risk management processes and use risk data more effectively in its investment decisions.
Hungary recently vetoed a European Union decision on providing aid to Ukraine, blocking 26 other member states.
Russian drones invaded European airspace in the past year.
Norges Bank Investment Management uses AI to monitor its geopolitical risk scenarios on an ongoing basis between quarterly updates.
Securities lending has contributed approximately 25% of Norges Bank Investment Management's long-term relative performance.
Norges Bank Investment Management's securities lending program generated 6 billion kroner in excess return in 2023.