On the heels of Europe’s biggest banking crisis in more than a decade, regulators, supervisors, and thus risk managers are on notice. Supervisors, led by the European Central Bank (ECB), are ever vigilant, and heightened supervision is here to stay. As a result, risk managers must move to shore up their responses to the ECB’s regulatory Supervisory Review and Evaluation Process (SREP).
A successful SREP response will not only satisfy supervisors but also support an institution’s ability to weather disruption in the marketplace.
The good news is that many institutions have fashioned strong processes in managing SREP and making improvements in risk management. So what makes for an effective SREP response? In this article, we outline best practices and call out the changes and responses required from the latest cycle of ECB review. We identify four “secret ingredients” that support a successful response to both SREP and ECB Pillar 2 requirements (P2R). We also take our analysis a step further, offering our thoughts on how institutions can better prepare for and deliver against the European Banking Authority (EBA) or ECB regulatory stress tests and improve Pillar 2 guidance (P2G).
To read the full article, download the PDF here.
