Response to consultation on draft Regulatory Technical Standards on resolution planning

Q1: Do you have any comments on the minimum essential information to be part of resolution plan summaries?

We agree that minimum essential information is needed to ensure comparability and transparency of resolution plan summaries. We would, however, recommend three enhancements:

1. Explicit inclusion of non-financial risk profile
   • Resolution plan summaries should include high-level quantitative indicators of non-financial risk, not only capital, liquidity and MREL.
   • A standardized metric such as Risk Units (RUs), which quantifies residual non-financial risks in a single additive measure, could be used to show:
     • Total residual non-financial risk;
     • Concentrations by business line, geography, or critical function; and
     • Recent trends or trajectories in those risks.
   • This would help stakeholders understand whether the institution is accumulating operational, cyber, governance or ESG risks that may undermine resolvability even when capital ratios look sound.
2. Link between resolvability and risk data aggregation capabilities
   • Given the explicit link made by BCBS 239 between improved risk data aggregation and better recovery and resolution outcomes, we suggest that the summary should briefly state:
     • The institution’s ability to produce timely, accurate and complete risk data in stress; and
     • Any material limitations in systems, data architecture or governance that might impede execution of the preferred resolution strategy.
3. Forward-looking early-warning perspective
   • The summary should not only describe “how the bank will be resolved”, but also summarize key quantitative early-warning indicators that would trigger escalation towards resolution (including non-financial risk indicators, if available).
   • Using a standard, additive measure such as RUs would allow authorities to compare these early-warning thresholds across institutions and over time.

Q2: Do you have any comments on the reorganisation of the resolvability assessment along the seven proposed dimensions?

We broadly support organising the resolvability assessment along the seven proposed dimensions, as this promotes a more structured and comparable approach across institutions.

Our main comment is that data, metrics and risk aggregation should be treated as a cross-cutting enabler rather than a purely technical sub-topic:

• Experience with BCBS 239 shows that many banks focused on IT and data “plumbing”, but failed to implement a standardized risk metric to aggregate exposures across legal entities, business lines and risk types.
• We therefore recommend that, within each of the seven dimensions, the RTS explicitly asks:
  • Can the institution quantitatively evidence this dimension in a standardized way across the group?
  • Can it do so under stress, on a sufficiently timely basis for resolution execution?

Here the use of RUs, as a standardized, additive unit for non-financial risk, would support consistent and comparable assessment of operational and other non-financial risk drivers across all seven dimensions.,

Q3: Do you have any comments on the elements to be considered under each resolvability di-mension?

We have three horizontal comments on the elements to be considered under each dimension:

1. Make non-financial risk explicit, not implicit
   • Many resolution failures or near-misses (e.g. severe operational incident, IT migration failure, misconduct or governance breakdown) are primarily non-financial in origin, but they manifest as capital or liquidity problems only at a late stage.
   • We recommend that each dimension explicitly asks how **non-financial risks are:
     • Identified;
     • Quantified (preferably in a standard metric such as RUs); and
     • Mitigated and monitored on a going-concern basis**, not only in resolution.
2. Require standardized, aggregatable metrics
   • The elements currently rely heavily on qualitative descriptions (governance arrangements, playbooks, etc.).
   • We suggest requiring institutions to provide quantitative, aggregatable indicators of their position under each dimension (e.g. residual non-financial risk in RUs associated with critical functions, outsourcing chains or IT platforms).
   • BCBS 239 has already highlighted the importance of accurate, complete and timely aggregated risk data as a precondition for effective crisis management and resolution.
3. Tie resolvability elements back into going-concern risk management
   • To avoid resolution planning becoming a purely documentary exercise, the RTS could clarify that key resolvability metrics and data should be:
     • Used in internal risk appetite and risk reporting; and
     • Escalated to management and the board as part of regular firm-wide risk dashboards.
   • Risk Accounting helps here by using RUs to integrate non-financial risk metrics into performance management, bridging the gap between risk management and business decision-making.

Q4: Do you have any comments on the proposed content for liquidation plans?

We agree that liquidation plans are a necessary complement to bail-in and other resolution strategies. Our comments are:

1. Quantitative assessment of “disorderly liquidation risk”
   • Liquidation plans should explicitly assess the non-financial risks associated with a liquidation (e.g. failure of outsourced services, IT decommissioning, data retention, conduct and legal risks, ESG impacts).
   • Using RUs, institutions could quantify the residual non-financial risk associated with different liquidation paths (e.g. piecemeal asset sale vs. portfolio transfer vs. run-off), enabling authorities to compare options on a standardized basis.
2. Use of the same data and metrics as the resolution plan
   • The RTS should stress that liquidation plans must not be based on a different data universe from the resolution plan.
   • The same risk data architecture and standardized metrics (including RUs for non-financial risk) should underpin both; otherwise, authorities risk facing inconsistent numbers at the very point where speed and clarity are critical.
3. Forward-looking triggers for shifting from resolution to liquidation
   • The plan should define not just the liquidation steps, but also quantitative triggers (including non-financial risk indicators) that would lead the authority to conclude that resolution is no longer feasible and liquidation is preferable.

Q5: Do you have comments on the process for the participation of the observers in the resolu-tion college?

We support a structured role for observers in resolution colleges, but with clarity of mandate and access:

1. Clarify observers’ access to standardized data and metrics
   • Observers can add value only if they have sufficient access to aggregated risk data (subject to confidentiality).
   • We suggest the RTS clarify that observers should, at a minimum, receive the standardized key risk metrics used in the college (including any RU-based non-financial risk indicators), so that discussions are grounded in a common quantitative picture.
2. Prevent duplication and “shadow colleges”
   • Clear rules on observers’ rights and limitations can prevent the emergence of informal or duplicative structures, which would undermine the efficiency the RTS is trying to achieve.

Q6: Do you have comments on the procedures for the exchange of information between the members of the resolution college?

We strongly welcome the emphasis on information exchange and see this as an area where lessons from BCBS 239 and related work are highly relevant.

We recommend:

1. Machine-readable, standardized data structures
   • The RTS should encourage the use of common, machine-readable formats for the core data sets exchanged within the college.
   • The Risk Accounting framework is designed to sit on top of existing accounting systems and use controlled, audited transactional data to construct standardized risk measures, which makes it well-suited for such standardized exchange.
2. Unified risk metric for cross-border comparability
   • Differences in local practices often make it hard to compare risk profiles across jurisdictions.
   • A common metric such as the RU would allow college members to aggregate and compare non-financial risks consistently across entities, making joint assessments of resolvability and systemic impact more robust.
3. Proportional, but not minimal, implementation
   • We support proportionality, but experience from BCBS 239 shows that if proportionality is interpreted as “minimal effort”, risk data aggregation and reporting remain weak precisely where they are most needed.
   • The RTS could clarify that proportionality should not undermine the quality and comparability of essential risk data that underpins resolution execution.

Q7: Do you have comments on the notification to the resolution college and the process that would be initiated by an emergency situation?

We agree with the need for clear notification and escalation processes in emergencies. Our suggestions:

1. Quantitative triggers including non-financial risk indicators
   • The RTS could encourage authorities to define objective, quantitative triggers for notifying the college, including:
     • Sharp increases in residual non-financial risk (e.g. RU-based indicators);
     • Material cyber or operational incidents; and
     • Breaches of non-financial risk appetite.
   • This would reduce reliance on purely judgmental or backward-looking triggers.
2. Use of pre-agreed “data packs”
   • The emergency process should specify a pre-defined data pack to be shared rapidly with college members on trigger, built from the same standardized metrics and data structures used in regular resolvability assessments (including RUs where implemented).
3. Alignment with recovery planning
   • To avoid confusion and duplication, emergency notifications and data packs for the resolution college should be aligned with, and build on, the firm’s recovery plan metrics and indicators, many of which can be enhanced by adding standardized non-financial risk quantification.

Q8: Do you have comments on the process steps for reaching joint decisions?

We support a clear, staged process for joint decisions. Our main observation is that the quality of joint decisions depends heavily on the quality of the underlying risk metrics and data:

1. Common quantitative “single source of truth”
   • The RTS could encourage the use of a common quantitative baseline—including standardized non-financial risk measures—for all joint decisions on resolution strategies, MREL calibration and assessment of barriers to resolvability.
   • Risk Accounting’s RU provides such a baseline for non-financial risk, allowing participants to discuss facts (quantified residual risks) rather than competing narratives.
2. Documenting disagreements in terms of metrics
   • Where authorities disagree, it would be helpful if the RTS encouraged documenting which data, assumptions or metrics differ, not only the qualitative rationale.
   • This would, over time, highlight where further standardization (e.g. wider adoption of RU-based non-financial risk metrics) could reduce recurring frictions.

Q9: Do you have other comments in relation to the amended RTS?

Two final points:

1. Guard against resolution planning becoming purely documentary
   • There is a real risk that, in practice, institutions devote significant resources to drafting and refreshing plans, but little changes in their day-to-day risk management and risk culture.
   • To counter this, we suggest the RTS:
     • Emphasize that key resolvability metrics and data must be integrated into going-concern risk management, risk appetite, internal reporting and performance management; and
     • Encourage supervisors to assess whether the same data and metrics used for resolution planning (including standardized non-financial risk metrics where available) are used by boards and management in normal times.
2. Encourage pilot use of standardized non-financial risk metrics (e.g. Risk Units)
   • The RTS could invite authorities and institutions to pilot the use of standardized non-financial risk metrics, such as the Risk Unit (RU) from the Risk Accounting framework, which:
     • Quantifies residual non-financial risks in a single, additive unit;
     • Supports automated risk data aggregation and forward-looking risk evaluations;
     • Aligns with the objectives of BCBS 239 by creating a unified metric for enterprise-wide risk data aggregation and reporting.
   • We believe such pilots would materially enhance the practical usefulness of resolution planning, shifting the emphasis from “planning for death” to measuring and managing the risks that might lead to failure in the first place.

Additional information, helpful for the understanding of the risk accounting method, can be found in the attached document. We would be pleased to share further technical material on Risk Accounting and the Risk Unit concept, and how these could be integrated into the EU resolution framework.

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