EBA publishes report on banks’ dry run testing of recovery plans

The European Banking Authority (EBA) has published a report analyzing how banks conduct dry run tests of their recovery plans. The report emphasizes that dry runs are an effective tool for strengthening operational preparedness and crisis readiness, especially when used meaningfully.

The analysis shows that most institutions recognize the value of dry runs and use lessons learned to improve recovery planning. However, approaches and maturity levels vary significantly across institutions.

Institutions conducting dry runs mainly to meet supervisory expectations tend to have less effective exercises, resembling compliance checks with limited insights. Conversely, institutions with advanced practices integrate dry runs into their broader risk management, improving internal preparedness and organizational understanding of recovery arrangements.

The EBA highlights the importance of maintaining regular, high-quality testing and refining dry run practices. It also suggests that better integration of testing activities across recovery and resolution can support more effective crisis management.

In line with supervisory priorities for 2026, the EBA conducted this thematic analysis to support institutions’ development of dry run practices. The report aligns with recent initiatives, including the EBA Handbook on Simulation Exercises for Resolution Authorities and preparations for EU-wide simulation exercises under the Crisis Management and Deposit Insurance framework.

This benchmarking exercise aims to support institutions rather than provide prescriptive guidance, fostering the development of effective dry run practices and useful benchmarks.