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Case Study

Update of a recovery plan : Implementation and submission package

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The client is a Public Investment and Financing group serving French companies which has two main characteristics.

  • The Bank has a mission of general interest: in case of financial difficulties, the Bank would not be able to stop any new activity
  • The shareholding of the Bank is public with a direct link with the French state

THE CHALLENGE

The client was looking to enrich and strengthen its recovery strategy but also to address a number of issues identified by the ECB in the previous recovery plan package. The key areas of improvements aimed to:

  • Improve the design and the quantification of scenarios and of the recovery options
  • Review and update the recovery indicators
  • Test the effectiveness of the recovery plan through the draft of a playbook as a dry-run exercise and the writing of a playbook (Dry-run protocol)

Our mission consisted of updating the recovery plan on all its key components, notably, the recovery stress tests, the recovery options and the recovery indicators while addressing in a best effort ECB’s recommendations.

APPROACH AND SOLUTION

In order to succeed in this project, the approach retained by the Avantage Reply team and the client was based on 8 milestones listed below:

  • The enrichment and update of the recovery plan document
  • The deepening of the analysis of relevant entities, core activities and critical functions
  • The strengthening of stress test scenarios and simulations, including an improved assessment of the outcomes before and after the application of recovery options
  • The enhancement of the evaluation of interdependences and implications of recovery options
  • The review and update of recovery indicators
  • The deepening of the information system continuity analysis in case of the bank’s recovery
  • The testing of the recovery plan effectiveness through a dry-run exercise and playbook document
  • The completion of the Recovery plan package ready for submission to the ECB

RESULTS AND BENEFITS

The recovery package document was fully updated and completed in time in line with the key milestones. The ECB recommendations were mostly addressed, and the playbook had been given to the ECB. A dry-run exercise is scheduled for the following quarter. It is planned for the next recovery plan exercise to reshape all the recovery scenarios and options in order to be fully aligned with the ECB requirements.