[OR] [KIB] [E1] [C1] Overview of OR Case Study

eBook 1: Chapter 1

Understanding Your Organisation: Kenanga Investment Bank as a Case Study

Introduction

For investment banks, the ability to continue delivering critical services during disruption is no longer a matter of operational efficiency alone—it is a core expectation of regulators, clients, and markets.

Kenanga Investment Bank Berhad (“Kenanga Investment Bank”), as one of Malaysia’s leading investment banks, provides a compelling case study for understanding how operational resilience can be designed, embedded, and sustained within a complex financial institution.

With a diversified portfolio spanning investment banking, capital markets, equities trading, asset and wealth management, Kenanga operates at the intersection of market volatility, technology dependence, and regulatory scrutiny.

This chapter sets the foundation for Kenanga Investment Bank’s operational resilience journey by examining its organisational context, operating environment, governance structure, and strategic objectives.

In line with the 2025 BNM Discussion Paper on Operational Resilience, the focus is on understanding what must be protected, why it matters, and who is responsible—before moving into implementation and execution in subsequent instalments.

Understanding Your Organisation: Kenanga Investment Bank

Kenanga Investment Bank is a licensed investment bank under the Financial Services Act (FSA) and Islamic Financial Services Act (IFSA), operating within Malaysia’s regulated financial ecosystem. Its business model is characterised by:

• Capital-markets-centric revenue streams
• High transaction volumes and time-critical activities
• Strong reliance on market infrastructure, third-party service providers, and technology platforms
• Direct exposure to market confidence and investor trust

From an operational resilience perspective, Kenanga is not only responsible for safeguarding its own operations, but also for ensuring market continuity, orderly trading, and client asset protection—outcomes explicitly emphasised in BNM’s supervisory expectations.

Understanding Kenanga as an organisation requires looking beyond organisational charts and financial performance, and instead focusing on:

• How value is delivered to customers and markets
• Which services are “important” in the eyes of regulators and stakeholders
• How disruption could propagate across the financial system

Kenanga Investment Bank’s Operating Environment

Kenanga operates within a multi-layered operating environment, shaped by internal, external, and systemic factors.

Regulatory and Supervisory Landscape

Kenanga is subject to oversight by:

• Bank Negara Malaysia (BNM)
• Securities Commission Malaysia (SC)
• Bursa Malaysia and associated market operators

The 2025 BNM Discussion Paper on Operational Resilience highlights the growing expectation for financial institutions to:

• Identify important business services
• Set impact tolerances for disruption
• Demonstrate the ability to remain within those tolerances during severe but plausible scenarios

For Kenanga, this translates into heightened accountability for market-facing services such as trading, settlement, and client servicing.

Market and Economic Environment

Kenanga’s operations are directly influenced by:

• Capital market volatility
• Investor sentiment and confidence
• Macroeconomic shocks and geopolitical events

Periods of market stress amplify operational risks, making resilience capabilities most critical precisely when demand for services peaks.

Technology and Third-Party Dependence

Like most modern investment banks, Kenanga relies heavily on:

• Trading and order-management systems
• Market data providers
• Clearing, settlement, and custodial infrastructures
• Outsourced IT and cloud-based services

BNM’s guidance underscores that operational resilience extends beyond the institution’s own walls, requiring visibility and control over third-party dependencies—an important consideration for Kenanga’s operating model.

Composition of an Operational Resilience Team for Kenanga Investment Bank

Effective operational resilience is fundamentally a governance and accountability exercise, not merely a technical one.

In alignment with the 2025 BNM Discussion Paper, Kenanga’s operational resilience framework should be supported by a cross-functional, enterprise-wide team, typically comprising:

Board and Senior Management

• Provide strategic direction and risk appetite
• Approve impact tolerances for important business services
• Ensure resilience is embedded into business strategy

Operational Resilience Lead / Coordinator

• Owns the resilience framework end-to-end
• Coordinates across business units, risk, IT, and compliance
• Acts as the primary interface with regulators

Business Unit Representatives

• Identify important business services
• Map end-to-end processes, resources, and dependencies
• Validate realistic disruption scenarios

Risk Management and Compliance

• Align operational resilience with enterprise risk management
• Ensure regulatory expectations are met
• Support scenario testing and assurance activities

Technology, Cybersecurity, and Operations

• Assess system resilience and recovery capabilities
• Identify single points of failure
• Support testing against severe but plausible disruptions

This collaborative structure reflects BNM’s emphasis that operational resilience cannot sit in silos and must be jointly owned across the organisation.

Critical Business Services of Kenanga Investment Bank

A central concept in BNM’s operational resilience framework is the identification of Critical Business Services (CBS)—services whose disruption would cause intolerable harm to customers, markets, or financial stability.

For Kenanga Investment Bank, examples of critical business services include:

• Securities trading and execution
• Clearing and settlement of capital market transactions
• Custody and safeguarding of client assets
• Investment banking deal execution
• Wealth and asset management client servicing

Rather than focusing solely on internal processes, BNM expects institutions to define services from the perspective of external users and outcomes. For Kenanga, this means asking:

• Which services, if disrupted, would undermine market confidence?
• Which services are time-critical and non-substitutable?
• Which failures could have systemic or reputational consequences?

These services serve as the anchor for subsequent impact-tolerance setting, scenario testing, and investment decisions.

Key Characteristics of Kenanga Investment Bank

Several organisational characteristics influence how operational resilience should be designed for Kenanga:

• Market-Facing and Time-Sensitive Operations
  Even short disruptions can have a disproportionate impact.
• High Transaction Volumes
  Errors or delays can cascade rapidly across systems and counterparties.
• Complex Ecosystem Dependencies
  Reliance on exchanges, clearing houses, vendors, and data providers.
• Strong Regulatory Visibility
  As a key market participant, Kenanga’s resilience maturity is closely scrutinised.

These characteristics reinforce BNM’s position that operational resilience must go beyond traditional business continuity planning and address end-to-end service delivery under stress.

Establishing Organisational Goals for Operational Resilience

In line with the 2025 BNM Discussion Paper, operational resilience goals for Kenanga Investment Bank should be outcome-focused, measurable, and aligned to strategic priorities.

Key organisational goals may include:

1. Ensure Continuity of Critical Business Services
   Maintain service delivery within defined impact tolerances during severe but plausible disruptions.
2. Protect Customers, Markets, and Client Assets
   Prevent harm arising from operational failures, delays, or data compromise.
3. Strengthen Governance and Accountability
   Clearly assign ownership for resilience outcomes at senior levels.
4. Improve Visibility of Operational Vulnerabilities
   Identify critical dependencies, concentration risks, and single points of failure.
5. Embed Resilience into Strategic Decision-Making
   Ensure new products, technologies, and outsourcing arrangements are resilience-by-design.

BNM’s guidance makes it clear that operational resilience is not a one-off compliance exercise, but a continuous capability that evolves alongside the institution’s business model and risk profile.

Understanding Kenanga Investment Bank—its operating environment, services, governance, and strategic priorities—is the essential first step in building operational resilience by design.

This chapter establishes the organisational context required to:

• Identify what truly matters
• Understand where vulnerabilities lie
• Align resilience efforts with regulatory expectations and business realities

In the next instalment, “Implementing Operational Resilience for Kenanga Investment Bank,” the focus shifts from understanding to execution—translating principles into practical frameworks, methodologies, and actions that enable Kenanga to withstand disruption and continue serving markets with confidence.

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For organisations looking to accelerate their journey, BCM Institute’s training and certification programs, including the OR-5000 Operational Resilience Expert Implementer course, provide in-depth insights and practical toolkits for effectively embedding this model.