Competent authorities shall assess whether an investment firm has robust and sound risk management and controls of its liquidity resources in place, as set out in Articles 24 and 26 of Directive (EU) 2019/2034 by considering the strategies, policies, processes and systems in place to maintain adequate levels of liquid resources, including all of the following:
the systems for measuring, managing and reporting liquidity risk and the investment firm’s governance framework, including the adequacy of its risk management function;
any mitigating actions, including the reduction of the investment firm’s activities requiring large cash outflows, the setup of its credit lines, its capital increase in cash and its use of assets as collateral in repo transactions;
the robustness of the investment firm’s recovery plan, where the obligation to draw up and maintain a recovery plan in accordance with Article 5(1) of Directive 2014/59/EU of the European Parliament and of the Council 6 applies.