4. Setting the framework of overall recovery capacity (ORC) for institutions

Institutions, for determining the overall recovery capacity (ORC), should define the following components in accordance with Section I of these guidelines:

• a. a list of credible and feasible recovery options;
• b. a range of scenarios of severe macroeconomic and financial stress.

Following the definition of the previous components, institutions should determine the ORC as a range of the ‘scenario-specific recovery capacities’ for all the relevant scenarios of severe macroeconomic and financial stress considered in the recovery plan, where the ‘scenario-specific recovery capacity’ is defined as the sum of the quantitative impacts of each recovery option that would be available and appropriate under each specific scenario, quantified in terms of institutions’ relevant recovery plan indicators referring to capital (including leverage) and liquidity listed in paragraph 26 (‘relevant RP indicators’).

Section I. ORC basic components

List of credible and feasible recovery options

Range of scenarios of severe macroeconomic and financial stress

Section II. Calculating ‘scenario-specific recovery capacity’

Starting point

Timeframe

Representation

Section III. Determining the ORC

Step 1 – Selection of recovery options

Step 2 – Adjustment of recovery options: additional constraining factors

Step 3 – Calculation of ‘scenario-specific recovery capacity’

Step 4 – Determination of the ORC range