In November 2011, the G20 leaders endorsed and passed recommendations to address the moral hazard posted by Systemically Important Financial Institutions (SIFIs). This includes the requirement for an adequate, credible recovery and resolution plan (RRP) from any firm that is assessed by its home authority to have potential impact on financial stability.
The Dodd-Frank Act has many components that will result in several new regulations that corporations must follow to remain compliant. There are 120 institutions that are listed as systemically important and will have a financial impact if they fail; these institutions must submit a risk resolution plan that would avoid major disruptions. The recovery plan remains under the control of management; however, it is a key supervisory tool to identify options to recover financial strength and viability under severe stress.