Strategic Importance and Benefits of Resolution Planning

Benefits of Resolution Planning

It is envisaged with the effective and proper implementation of resolution planning, member institution will develop the necessary financial, operational and other related capabilities to improve its resolvability through resolution planning.

Synergies are created through the integration of these capabilities into the day-to-day processes and operations of the member institution.

The benefits from these efforts and investments in resolution planning include:

Enhanced governance Ensuring well-defined roles and responsibilities of the board of directors and senior management is important in times of stress and could also strengthen the member institution’s risk management framework.

Improved operational efficiency As part of resolution planning, member institutions are expected to develop capabilities to support resolution/improve resolvability. Such capabilities will benefit the member institution not only during crisis, but also during business-as-usual. E.g. Enhancement in information technology system to support an effective resolution may also drive the overall operational efficiency and productivity of the member institution. This further enhances the franchise value of member institution.

Better risk management and monitoring Better understanding and integration of the recovery and resolution planning process into the risk management framework will enhance overall enterprise risk management and monitoring.

Complements recovery planning As a follow through from recovery planning, resolution planning aims to validate and enhance the recovery options and overall feasibility of the recovery plan.

Importance of a credible and effective resolution regime

No matter how much preparation is done, resolution is almost always likely to be complex to execute. Therefore, maintaining a credible and effective resolution regime that is fit and ready for use is a continuous process by PIDM as the financial system and regulatory landscape evolves.