The European Banking Authority has released a report analyzing how banks conduct dry run tests of their recovery plans, emphasizing best practices and areas for improvement.
The European Banking Authority (EBA) has published a report comparing how banks test the implementation of their recovery plans through “dry runs”. In a context of increased uncertainty, the report confirms that dry runs are an effective tool to strengthen operational preparedness and resilience to stress events.
The analysis shows that most institutions recognize the value of dry runs and use lessons learned to improve recovery planning. However, approaches and maturity levels vary significantly across institutions.
When dry runs are conducted mainly to meet supervisory expectations, they tend to be less effective, resembling compliance exercises with limited insights. Conversely, institutions with advanced practices use dry runs as management tools, integrating recovery planning into their broader risk management framework. These practices enhance internal preparedness by improving credibility, feasibility, and organizational understanding of recovery arrangements.
Looking forward, the EBA emphasizes the importance of maintaining regular, high-quality testing of key recovery plan elements and refining dry run practices. The report also highlights the benefits of stronger synergies and better integration of testing activities across recovery and resolution, supporting effective crisis management.
Legal basis and next steps include the focus on recovery plan testing in 2026 under the EBA supervisory convergence priorities. The report aligns with the EBA’s mandate to improve recovery and resolution planning and is timely given recent developments, such as the publication of the EBA Handbook on Simulation Exercises for Resolution Authorities and preparations for EU-wide simulation exercises under the Crisis Management and Deposit Insurance framework.
This benchmarking exercise aims to support institutions in developing their dry run practices and establishing useful benchmarks, rather than providing prescriptive guidance.
