1.   Competent authorities shall, having regard to the legal form, business model, the business and risk strategy, and the scale and complexity of the activities of an investment firm, during their supervisory review and evaluation process carried out in accordance with Article 36 of Directive (EU) 2019/2034, measure the risk of disorderly wind-down of the investment firm’s business by determining the amount of capital that would be considered adequate for that firm to be wound down in an orderly manner under plausible scenarios.

2.   The measurement referred to in paragraph 1 shall be proportionate to the complexity, risk profile, and scope of operation of the investment firm, and to the potential impact of its wind-down on clients and markets, and shall include the following:

(a)	an estimation of the realistic time frame to wind down the investment firm;

(b)	an assessment of operational and legal tasks of the investment firm during the wind-down process over a realistic time frame;

(c)	the identification and assessment of material fixed and variable costs;

(d)	the identification and assessment of material risks or elements of risks that could materialise during the wind-down process;

(e)	any other aspect relevant for the wind-down process.

3.   Where Directive 2014/59/EU of the European Parliament and of the Council (4) applies, available information on recovery actions and governance arrangements in the investment firm’s recovery or group recovery plan shall be taken into account by competent authorities for the purpose of paragraph 2, points (b) and (c), if the competent authorities consider that information sufficiently credible and reliable.

4.   For investment firms subject to the initial capital requirement laid down in Article 9(1) of Directive (EU) 2019/2034, competent authorities shall include in their measurement the following:

(a)	the closure costs, including litigation costs for the purpose of paragraph 2, point (c), of this Article;

(b)	the loss in revenues and loss in the net realisable value of assets expected to be incurred due to the wind-down process for the purpose of paragraph 2, point (d), of this Article.

5.   Competent authorities shall identify and quantify material costs, risks or elements of risks and shall determine the capital considered adequate to absorb them in accordance with paragraphs 1 and 2 of this Article.

Competent authorities shall use the relevant indicative qualitative metrics referred to in Article 6(1) and shall combine them with static and historical trend analysis, delivering their expert judgement as appropriate.

6.   The capital considered adequate to cover the risk of disorderly wind-down of an investment firm’s business measured in accordance with this Article shall be at least equal to the fixed overheads requirement of that investment firm calculated in accordance with Article 13 of Regulation (EU) 2019/2033.