What is recovery resolution planning?

Recovery Resolution Planning refers to the process by which financial institutions, especially large banks, develop strategies and plans to recover from severe financial distress or to be resolved in an orderly manner in case of failure. These plans are often required by regulators to ensure that the institution can either restore its financial health or be wound down without causing systemic risk to the financial system. The process involves identifying critical operations, assessing risks, outlining governance frameworks, and establishing triggers for action. Effective recovery and resolution planning helps protect depositors, maintain market confidence, and minimize taxpayer exposure.