The Supervisory Review and Evaluation Process (SREP) methodology applied by the European Central Bank (ECB) is aligned with the European Banking Authority (EBA) Guidelines on the SREP and is regularly updated to reflect new regulations and developments in supervisory practices. It is based on best practices within the Single Supervisory Mechanism (SSM) and on methods recommended by international organizations, ensuring continuous improvement and consistency across supervised entities. 


SREP 2024 Methodology

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Executive summary

The ECB has updated the SREP methodology for the 2024 exercise. This version introduces several improvements in the assessment of the internal governance and risk management framework (IGRM), as well as the risk to capital framework, with the aim of supporting greater alignment with supervisory expectations.

Main content

The SREP methodology update for 2024 affects both the SREP framework and two of the four elements that make up the framework:

  • The SREP framework. With this update, the ECB reinforces the adoption of a proportional and risk-based approach. It introduces a Risk Tolerance Framework (RTF) to improve supervision by prioritizing key vulnerabilities and aligning supervision with each bank's risk profile. It also incorporates the Multi-Year Assessment (MYA) resulting in a more efficient process by combining a basic annual review with specific assessments over a multi-year cycle. These updates streamline supervision while ensuring a more personalized and forward-looking assessment.
  • IGRM. The revised IGRM methodology addresses the emerging risks of the changing economic and regulatory landscape. Organizations must integrate ESG risks, improve diversity at the board level, strengthen the anti-money laundering (AML) framework and improve the management of technological risk.
  • Risk to capital. 
    • Assessment of risk to capital. For all risks except operational and ICT risk.  Phase 2 is eliminated, and compliance controls are integrated into Phase 3. In addition, the methodology adopts a modular approach for all assessments, except in IRRBB/CSRBB, allowing for more flexible and structured supervision according to the complexity of each entity.
    • Capital adequacy assessment. The risk to capital framework has been simplified, reducing its components from five to three, incorporating the challenge to ICAAP and stress tests into a single, holistic capital adequacy assessment.

Download the technical note on the SREP 2024 Methodology.