[OR] [KIB] [E1] [C5] Identifying Critical Business Services

eBook 1: Chapter 5

Critical Business Services of Kenanga Investment Bank in Operational Resilience

Introduction

Operational resilience is the ability of a financial institution to continually deliver critical business services (CBS) through disruptions, absorb shocks, and return to normal operations without causing intolerable harm to customers, the financial system, or the economy.

In financial services, CBS are defined as services that, if interrupted, will significantly affect the bank’s clients, pose systemic risks, or undermine confidence in financial markets.

For Kenanga Investment Bank Berhad (“Kenanga”), identifying CBS is a foundational step in developing an operational resilience program that meets regulatory expectations, including those articulated in Bank Negara Malaysia’s 2025 Operational Resilience Discussion Paper and global operational resilience principles (e.g., Basel Committee guidelines).

Purpose of the Chapter

This chapter sets the foundation for Kenanga Investment Bank’s Operational Resilience programme by identifying and articulating its Critical Business Services (CBS).

The purpose is to help readers understand which externally delivered services are most important to clients, markets, and financial stability, and why these services must be prioritised in the design of resilience strategies.

By grounding CBS identification in recognised operational resilience principles, including those outlined by BCM Institute and the 2025 Bank Negara Malaysia (BNM) Discussion Paper on Operational Resilience, the chapter ensures alignment with evolving regulatory expectations and industry best practices.

By the end of this chapter, the reader is expected to clearly understand what constitutes a CBS in the context of an investment bank, how CBS differ from internal processes or functions, and why certain services provided by Kenanga Investment Bank require a greater focus on resilience.

This understanding will enable the reader to confidently proceed to subsequent chapters on impact tolerance setting, dependency mapping, scenario testing, and recovery strategies, all of which are anchored in the CBS identified here.

Definition of Critical Business Services (CBS)

A Critical Business Service is:

“A service provided by an organisation, or by another person on behalf of the organisation, to one or more clients, which, if disrupted, could cause intolerable harm to the organisation’s clients, or pose a risk to the soundness, stability, or resilience of the financial industry or the orderly operation of markets.”

According to this definition, CBS is an externally focused service that is essential for operational continuity, revenue generation, regulatory compliance, customer protection, and systemic stability.

Framework for Identifying CBS

To identify CBS for Kenanga Investment Bank, the following methodology is typically adopted within an operational resilience program.  The detailed OR planning methodology is presented in eBook 2, Implementing OR for Kenanga Investment Bank.

1. Business Services Impact Analysis (BSIA) – Evaluate services by their impact on clients, revenue, regulatory compliance, and systemic risk if disrupted.
2. Stakeholder Engagement – Gather insights from business units, risk, technology, and compliance functions.
3. Mapping Dependencies – Document supporting processes, technologies, people, and third-party service providers.
4. Impact Tolerance & Recovery Objectives – Define the maximum acceptable disruption (impact tolerance), recovery time objectives (RTO), and recovery point objectives (RPO).

This approach produces a structured list of services that Kenanga must support under adverse conditions to remain resilient.

Critical Business Services at Kenanga Investment Bank

Based on the services offered by Kenanga Investment Bank and standard operational resilience principles, the following are likely defined as CBS.

These should be validated through BSIA and aligned with regulatory expectations of continuity, risk exposure, and market confidence:

Securities Broking & Trading Services

• Equity Broking & Global Equity Trading – Execution and settlement of client trade orders.
• Structured Warrants & Equity Structured Solutions – Facilitation of derivative and structured product transactions.

Rationale

Disruption to trading and broking services can directly affect investors’ ability to trade, disrupt market liquidity, and cause financial losses for customers.

Corporate & Capital Markets Services

• Corporate Investment Banking Services such as:
  • Corporate Finance and Advisory
  • Debt and Equity Capital Markets
  • Structured Financing

Rationale

These services support corporate funding, capital raising, and corporate transactions. Disruption could harm the client's corporate operations and systemic market confidence.

Treasury & Market Risk Services

• Foreign Exchange and Structured Investments
• Fixed Income Instruments and Treasury Products

Rationale

Treasury services underpin liquidity management, risk mitigation, and pricing in financial markets, thereby affecting both internal resilience and external client obligations.

Digital Platforms & Client Interfaces

• KenTrade, KDi GO, Kenanga Digital Investing, OnePRS, KenEASY, KenWealth and other digital portals.
• Back-office processing systems supporting client account management

Rationale

These platforms are frontline client-delivery channels. Failure could prevent transaction initiation, reporting, or access to funds, resulting in significant client harm and reputational damage.

Investment & Wealth Management Services

• Investment Management & Retirement Solutions
• Wealth Management Reporting and Advisory

Rationale

These services support long-term client portfolio management and continuity of investment advice, crucial to client financial planning.

Clearing, Settlements & Custodial Functions

• Settlement Services for Securities & Derivatives
• Custody and Safekeeping of Client Assets

Rationale

Interruptions to settlement or custodian functions can create systemic risk in financial markets and regulatory consequences for failing to meet obligations.

Regulatory Compliance & Risk Reporting

• AML/KYC Compliance Systems
• Operational Risk Reporting to BNM
• Financial & Regulatory Reporting

Rationale

Compliance and reporting services underpin legal operations. Disruption can result in regulatory breaches and governance failures.

Critical Business Services (CBS) of Kenanga Investment Bank

CBS Documentation & Governance

Under an operational resilience program, Kenanga must maintain a formal CBS inventory with associated:

• Service descriptions
• Impact tolerances
• Dependencies (people, technology, third parties)
• Recovery strategies and RTO/RPO
• Ownership and governance

This inventory should be reviewed at least annually and updated after material changes to business structure, regulatory requirements, or operational processes.

Effective governance should involve Board oversight, senior management accountability, and integration with enterprise risk management to ensure sustained resilience and regulatory compliance.

Examples of Operationalisation of CBS

As part of operational resilience implementation, Kenanga would typically:

• Conduct scenario-based testing to evaluate the ability to maintain CBS during high-impact outages (e.g., technology failures, cyber-attacks, third-party failures).
• Set impact tolerances for CBS to define acceptable disruption thresholds.
• Establish communication plans for clients and regulators during disruption.
• Align resilience objectives with BNM expectations for financial sector stability and continuity.

For Kenanga Investment Bank, a well-defined Operational Resilience Program must be grounded in a robust identification and governance of Critical Business Services.

These CBS reflect core business operations whose continuity is essential for client protection, financial stability, regulatory compliance, and systemic market confidence.

By embedding these services within the operational resilience framework—with clear impact tolerances, recovery plans, and governance structures—Kenanga can strengthen its capacity to absorb and recover from operational disruptions while fulfilling its strategic and regulatory obligations.

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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.