Since the 2007-08 Global Financial Crisis, testing of crisis preparedness and management plans emerged as an important tool for financial sector authorities to increase their ability to effectively respond to bank failures and other events that could adversely impact financial stability.

The lessons from the 2023 bank failures reinforce the need for deposit insurers, regardless of mandate, to test their operational capabilities, simulate effective decision making, and enhance cooperation and coordination with their financial safety-net partners (FSN). The COVID-19 pandemic also highlighted the importance for deposit insurers to test organisational resilience to critical events. However, despite increasing adoption and implementation of testing by deposit insurers and regulatory authorities, the 2023 IADI Thematic Review of Core Principles revealed high levels of non-compliance with the associated Core Principle. The report concluded that additional awareness, experience sharing, research and technical support on testing is essential to support deposit insurers’ efforts to increase compliance.

The Contingency Plan Research Working Group has undertaken a research project to review the evolution of testing programs across IADI members, identify emerging practices and provide insights on how testing is used to advance preparedness. Additionally, the Working Group has examined the connection between testing programs and real crisis events. Information for this project was gathered through a literature review, a survey, and case studies. Nineteen IADI Members participated in a survey and each of the six member jurisdictions of the Working Group provided a case study for this paper.