1.Institutions shall have robust governance arrangements, which include a clear organisational structure with well-defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks they are or might be exposed to, adequate internal control mechanisms, including sound administration and accounting procedures, and remuneration policies and practices that are consistent with and promote sound and effective risk management.
2.The arrangements, processes and mechanisms referred to in paragraph 1 shall be comprehensive and proportionate to the nature, scale and complexity of the risks inherent in the business model and the institution's activities. The technical criteria established in Articles 76 to 95 shall be taken into account.
3.EBA shall issue guidelines on the arrangements, processes and mechanisms referred to in paragraph 1, in accordance with paragraph 2.
4.Competent authorities shall ensure that recovery plans for the restoration of an institution's financial situation following a significant deterioration, and resolution plans are put in place. In accordance with the principle of proportionality, the requirements for an institution to draw up, maintain and update recovery plans and for the resolution authority, after consulting the competent authority, to prepare resolution plans, may be reduced if, after consulting the national macroprudential authority, competent authorities consider that the failure of a specific institution due, inter alia, to its size, to its business model, to its interconnectedness to other institutions, or to the financial system in general, will not have a negative effect on financial markets, on other institutions or on funding conditions.
Institutions shall cooperate closely with resolution authorities and shall provide them with all information necessary for the preparation and drafting of viable resolution plans setting out options for the orderly resolution of the institutions in the case of failure, in accordance with the principle of proportionality.
In accordance with Article 25 of Regulation (EU) No 1093/2010, EBA shall be entitled to participate in and contribute to the development and coordination of effective and consistent recovery and resolution plans.
In that regard EBA shall be informed of, and shall be entitled to participate in, meetings relating to the development and coordination of recovery and resolution plans. Where any such meetings or activities take place, EBA shall be fully informed in advance of the organisation of such meetings, of the main issues to be discussed and of the activities to be considered.