Supervisory review (SREP)
Supervisors assess the risks banks face and check that banks are equipped to manage those risks properly. This activity is called the Supervisory Review and Evaluation Process, or SREP, and its purpose is to allow banks’ risk profiles to be assessed consistently and decisions about necessary supervisory measures to be taken.
What is the SREP?
How do we carry out the SREP?
Supervisors use a single methodology and a set of harmonised tools to assess banks consistently. They focus on banks’ business models, internal governance, risks to capital and risks to liquidity.Supervisory methodology
Supervisors analyse a bank’s business model to better understand its main activities and business areas, the environment in which it operates and its key vulnerabilities.Business model
Supervisors look closely at how a bank is run, examining its key people, functions, management bodies and committees.Internal governance and risk management
Risks to capital
Supervisors assess four categories of risk: credit risk, market risk, interest rate risk in the banking book and operational risk.Risks to capital
Risks to liquidity
Supervisors assess a bank’s ability to cover ad hoc cash needs, such as in times of economic uncertainty when depositors may withdraw much more money than usual.Risks to liquidity
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