Banks are required to draft recovery plans to prepare for possible financial difficulties and restore their viability in a timely manner during periods of financial distress. The core of the recovery plan outlines a wide range of credible and feasible recovery options to restore viability, for example to improve the capital or liquidity situation.
In contrast to recovery plans, resolution plans are not drawn up by the banks but are prepared and regularly updated by the Single Resolution Board and national resolution authorities. A resolution plan comprises a comprehensive description of credible and feasible resolution actions which may be implemented under the Single Resolution Mechanism if a bank meets all the conditions for resolution. It prepares the measures and the process for the potential orderly resolution of a bank by ensuring the continuity of its critical functions. See also
risk appetite statement (RAS)
A formal statement in which the management body expresses its views on the amounts and types of risk that the institution is willing to take in order to meet its strategic objectives.