The EBA publishes Report on banks’ dry run testing of their recovery plans

The European Banking Authority (EBA) published a Report comparing how banks test the implementation of their recovery plans through so-called “dry runs”. In a context of heightened uncertainty and the continued need for operational preparedness and resilience to unexpected stress events, the analysis confirms that dry runs are an effective tool to strengthen the operationalisation of recovery plans and enhance institutions’ crisis readiness. When used meaningfully, dry runs improve institutions’ ability to respond to stress situations in a timely and credible manner.

„The analysis finds that most institutions recognise the value of dry runs and use the lessons learned to improve their recovery planning arrangements. However, approaches and levels of maturity vary significantly across institutions.” – according to the press release.

„Where dry runs are carried out primarily to meet supervisory expectations, they tend to be less effective, resembling compliance exercises with limited insights and follow-up actions. By contrast, institutions with more advanced practices use dry runs as genuine management tools, fully embedding recovery planning within their broader risk management framework. In these cases, dry runs strengthen internal preparedness by enhancing the credibility, feasibility and organisational understanding of recovery planning arrangements.” – EBA explained.

Looking ahead, the EBA highlights the importance for institutions to maintain regular, high-quality testing of key recovery plan elements and to continue refining  their dry run practices. The Report also points to the potential benefits of stronger synergies and better integration of testing activities across the recovery and resolution, supporting a more effective crisis management continuum.