ECB Annual Report on supervisory activities

Figure 2 gives an overview of the SREP methodology. An update of the relevant
SSM SREP Methodology Booklet was published in December 2016.
Figure 2
SSM SREP methodology 2016
SREP Decision
Quantitative capital
measures
Quantitative liquidity measures
Other supervisory
measures
Overall SREP assessment – holistic approach
Score + rationale/main conclusions
Viability and sustainability of
business model
Adequacy of governance and
risk management
Categories: e.g. credit,
market, operational risk and
IRRBB
Categories: e.g. short-term
liquidity risk, funding
sustainability
1. Business model
assessment
2. Governance and risk
management assessment
3. Assessment of risks to
capital
4. Assessment of risks to
liquidity and funding
The JSTs delivered the key input for the SREP by assessing, for their respective
banks, each of these four elements: business model, governance and risk
management, risks to capital and risks to liquidity and funding.
The SSM SREP methodology was
enhanced in 2016
In 2016 the SREP methodology for assessing governance and risk management
was enhanced, on the basis of the extensive thematic review on risk governance and
appetite 7 performed by the JSTs in 2015.
7
See Section 1.2.5.
<strong>ECB</strong> <strong>Annual</strong> <strong>Report</strong> on supervisory activities 2016 − Supervisory contribution to financial
stability 14