Recovery and exit plan

19. An APRA-regulated entity’s recovery and exit plan must include:

(a) a concise summary that provides a standalone guide to use the recovery and exit plan;

(b) a trigger framework for the early identification and monitoring of stress. The trigger framework must be relevant to the operating environment and risk profile of the APRA-regulated entity, and include a range of early warning indicators to support the effective activation and implementation of the recovery and exit plan;[10]

(c) governance arrangements for the monitoring of triggers and timely activation of the recovery and exit plan or specific actions within it. Governance arrangements must include clear roles and responsibilities at a senior executive level for the preparation, maintenance and execution of the recovery and exit plan;

(d) credible recovery actions that could be taken to stabilise and restore financial resilience;

(e) credible exit actions that could be taken to effect an orderly and solvent exit from regulated activity; and

(f) a communication strategy to support the execution of recovery and exit actions.

20. An SFI must also include in its recovery and exit plan:

(a) scenario analysis that assesses the effectiveness of the trigger framework, shows how recovery and exit actions could be implemented, and measures the impact and effectiveness of those actions. This analysis must include at least two scenarios that are severe enough to threaten the SFI’s viability, including a systemic and an idiosyncratic stress; and

(b) an assessment of recovery capacity, which is the aggregate impact of plausible recovery actions under each scenario. Recovery capacity must be measured in quantitative terms by calculating the amount of capital and liquidity that can be rebuilt during or following stress, where relevant.

21. An SFI must include, for each recovery and exit action in the plan:

(a) a timeline for the implementation of the action;

(b) analysis of any barriers to implementation, execution risks and key dependencies;

(c) a summary of the preparatory measures needed to support the timely and effective execution of the action; and

(d) where relevant, an estimate of the impact of the action on the capital and liquidity position of the APRA-regulated entity, based on credible assumptions.[11]

22. APRA may require of an APRA-regulated entity:

(a) the inclusion or exclusion of a particular recovery or exit action within the recovery and exit plan;