This is how we work with risk in the fund | Risk Summit 2026 | Norges Bank Investment Management

The end of cooperative global order

Marta Palino contrasts the 1997 era of NATO-Russian cooperation and EU unity with today's fragmentation, where geopolitical risk has shifted from a footnote to a core driver of asset pricing.

Four-pillar risk framework

NBIM manages geopolitical risk through Inform (organization-wide alignment), Simulate (tabletop exercises), Integrate (flow into financial stress tests), and Consult (external experts).

37% loss scenario in a fragmented world

Stress testing reveals a tail risk where total collapse of international trust and formation of economic blocs could cause the fund to lose 37% of its value, emphasizing preparation over prediction.

AI-powered scenario monitoring

The team assigns quarterly probabilities to risks involving war, sanctions, and investment restrictions, using AI to monitor developments between quarterly updates.

Hidden risks in profitable strategies

Securities lending generates roughly 25% of long-term relative performance (6 billion NOK in 2025), but with 2,000 billion NOK lent annually (~10% of NAV), counterparty default poses systemic threats.

The Lehman lesson on correlation

During a default, the fund must sell collateral (hedge funds' long positions) to buy back loans (their shorts), creating dangerous alignment with highly levered investors in crisis markets.

Active de-risking during Credit Suisse

Monitoring early warning signals allowed NBIM to reduce exposure from 60 billion to 600 million NOK before the forced UBS merger by demanding more collateral and running down positions.

Portfolio-level risk questioning

Traders must evaluate whether transaction revenue compensates for accumulated risk and assess how each trade contributes to total counterparty exposure rather than viewing deals in isolation.

Interconnected emerging threats

Nicolai Tangen notes that AI risks now cascade into cyber and geopolitical domains, creating complex, non-linear risk environments that traditional siloed approaches cannot capture.

Next horizon for risk technology

NBIM is embedding AI throughout risk processes while integrating risk data more deeply into investment decisions to move beyond static models.

Transparency as risk mitigation

As the world's most transparent fund, NBIM leverages openness to acquire external knowledge, operating on the principle that risk management is a collaborative effort to improve market safety rather than a competitive advantage.