Papers › Deep xVA solver -- A neural network based counterparty credit risk management framework

Deep xVA solver -- A neural network based counterparty credit risk management framework

6 May 2020arXiv:2005.02633archive 2025-07-28

Alessandro Gnoatto, Athena Picarelli, Christoph Reisinger

In this paper, we present a novel computational framework for portfolio-wide risk management problems, where the presence of a potentially large number of risk factors makes traditional numerical techniques ineffective. The new method utilises a coupled system of BSDEs for the valuation adjustments (xVA) and solves these by a recursive application of a neural network based BSDE solver. This not only makes the computation of xVA for high-dimensional problems feasible, but also produces hedge ratios and dynamic risk measures for xVA, and allows simulations of the collateral account.

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