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Assessment of risks and vulnerabilities

“When we planned our supervisory focus for 2021, we looked at two things. We mapped the main risks that banks are facing, and the weaknesses that make banks vulnerable to these risks.”

- Andrea Enria, Chair of the Supervisory Board

The main outcomes of the risk assessment exercise for 2021 are presented in the Single Supervisory Mechanism (SSM) Risk Map and the table of vulnerabilities below.

The SSM Risk Map shows the key risk drivers that are expected to affect supervised institutions over the next two to three years. These risks are assessed according to their impact and probability. The table of vulnerabilities indicates banks’ internal and external weaknesses. These weaknesses are the channels via which the risks might affect the banking sector.

Risk drivers and vulnerabilities should not be viewed in isolation, as they may trigger or reinforce one another.

Risk Assessment for 2021

SSM Risk Map for 2021

The risk picture has been shaped by the coronavirus (COVID-19) pandemic and the high uncertainty about the macroeconomic outlook.

SSM Risk Map for 2021

Source: ECB and national competent authorities.
Note: Dots with a white fill denote risk drivers that are expected to increase strongly over the next five years; “ML/TF” refers to money laundering and terrorist financing; “NPLs” refers to non-performing loans.

The SSM Risk Map shows an aggregated picture for all supervised institutions and highlights only the key risk drivers. As such, it should not be considered an exhaustive list of all the risks faced by the banking sector.

Key vulnerabilities in the banking sector in 2021

The risks outlined above might affect banks through existing internal and external vulnerabilities prevalent in the banking system itself or in the environment in which banks operate. Based on the current risk picture, the identified key vulnerabilities shape the priority areas for supervision in 2021.

Table of vulnerabilities for 2021

Source: ECB and national competent authorities.
Note: Internal vulnerabilities can be addressed by the banks themselves, while external vulnerabilities refer to the environment in which banks operate.


Information about previous risk assessment exercises