The Guidelines establish a consistent framework for the determination of the overall recovery capacity (ORC) by institutions in their recovery plans and the respective assessment by competent authorities and aim at strengthening institutions’ effective crisis preparedness.
The objective of the ORC is to provide a summary of the overall capability of the institution to restore its financial position after a significant deterioration by implementing suitable recovery options. The assessment by competent authorities of an institution’s overall recovery capacity allows to understand to what extent an institution would be able to recover from a range of potential crisis situations.
The main goal of the Guidelines is to harmonise the observed practices on the ORC determination and assessment, so as to improve the usability of recovery plans and make crisis preparedness more effective.
The Guidelines are composed of two sections. The first one addressed to institutions, aims at providing guidance on the relevant steps to set-up a reliable ORC framework. The second one, addressed to competent authorities, complements the framework by harmonising the core elements of the competent authorities’ assessment of the ORC from both a quantitative and qualitative perspective.
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