(25)The scope of information available to the institution with regard to defaulted exposures is significantly different from that regarding performing exposures. In particular, two additional risk drivers are available for the defaulted exposures, namely the time in-default and realised recoveries. Therefore, the estimation of LGD carried out before the default is not sufficient, because the risk estimates should take into account all significant risk drivers. Additionally, for defaulted exposures it is already known what the economic conditions were at the moment of default. Furthermore, LGD for defaulted exposures should reflect the sum of expected loss under current economic circumstances and possible unexpected loss that might occur during the recovery period. Therefore, competent authorities should verify that the LGD for defaulted exposures (‘LGD in-default’) is estimated either directly or as a sum of best estimate of expected loss (‘EL BE ’) and an add-on that captures the unexpected loss that might occur during the recovery period. Irrespective of the approach applied the estimation of the LGD in-default should take into account the information on the time in-default and recoveries realised until the time of estimation and consider a possible adverse change in economic conditions during the expected length of the recovery process.