ECB Prioritizes Geopolitical and Operational Resilience

In a recent blog post, the European Central Bank’s (ECB) Sharon Donnery, a Member of the Supervisory Board, and Mario Quagliariello, Director of Supervisory Strategy and Risk, set out the ECB’s key supervisory priorities for 2026–2028.

The ECB’s first priority is resilience to geopolitical and macro-financial shocks. Supervisors will focus on whether banks have adequate governance and risk controls in place, including through a 2026 thematic reverse stress test in which each bank defines its own geopolitical scenario tailored to its specific vulnerabilities. The authors also cautioned that a more constrained fiscal backdrop could limit governments’ ability to cushion future shocks, increasing the importance of bank preparedness.

The ECB’s second priority is operational resilience and information and communication technology (ICT) risk management capabilities. The authors flagged cybersecurity and third-party risk management as continued focus areas, and noted that the ECB expects banks to implement new requirements under the Digital Operational Resilience Act swiftly. They pointed to ongoing follow-up on persistent weaknesses in risk data aggregation and risk reporting, citing the slow pace of progress so far.

Amid this shifting risk landscape, Donnery and Quagliariello emphasized the importance of both banks and their supervisors staying ahead of technology-driven disruption. “Accelerated digital innovation, particularly in AI, is transforming the banking industry,” they wrote. “Banks must act strategically to harness the long-term value of AI, while addressing associated risks. We will expand our focus from prudentially relevant applications to generative AI more broadly, we will assess its impact on banks’ risk profiles and governance frameworks and we will engage with banks on how they are using these new tools.”

The authors argued that the evolving risk environment will also require supervisors to be more agile and risk-focused. As such, they wrote, the ECB will continue efforts to streamline supervision to make it more effective and efficient. “By making our processes more efficient, we expect to reduce the compliance workload and costs for banks, while always ensuring this does not come at the expense of the resilience that is so vital for keeping the European banking system safe and sound,” Donnery and Quagliariello concluded.