[OR] [KIB] [E3] [CBS] [1] [ST] Perform Scenario Testing

CBS-1 Securities Broking & Trade Execution

Introduction

Scenario testing is a core capability within Kenanga Investment Bank’s Operational Resilience framework, enabling the organisation to assess its ability to continue delivering CBS-1 Securities Broking & Trade Execution during severe but plausible disruptions.

Rather than testing isolated systems or departments, scenario testing evaluates the end-to-end impact on service, spanning people, processes, technology, third-party dependencies, and data.

This approach is consistent with regulatory expectations outlined in the 2025 BNM Discussion Paper on Operational Resilience, which emphasises forward-looking preparedness, ICT and cyber resilience, and management’s ability to respond decisively under stress.

For CBS-1, scenario testing focuses on disruptions that could impair market access, trade execution, settlement integrity, and regulatory reporting—areas where operational failure could result in significant financial loss, regulatory breaches, and reputational damage.

The following table outlines recommended scenario-testing themes for each Sub-CBS, explicitly integrating Cyber and ICT risk scenarios and highlighting evidence of proactive risk-management actions expected of a resilient investment bank.

Table P6: Perform Scenario Testing for CBS-1

Sub-CBS Code	Sub-CBS	Recommended Scenario Test Themes	Impact / Effect	Evidence of Proactive Risk Management Action
1.1	Client Onboarding & Order Intake	Cyber attack on client onboarding platform; identity data compromise; CRM system outage	Inability to onboard new clients or accept orders; data confidentiality breach	Regular cyber penetration testing; dual onboarding channels; data encryption and access reviews
1.2	Order Validation & Pre-Trade Checks	Corrupted market reference data; rules engine failure due to ICT outage	Invalid or non-compliant orders processed; regulatory exposure	Automated validation controls; manual override procedures tested; periodic rule-set integrity checks
1.3	Order Routing & Trade Execution	Exchange connectivity failure; DDoS attack on the order routing gateway	Trades fail to reach the market; missed execution opportunities	Multi-exchange connectivity; alternate routing paths; cyber DDoS mitigation drills
1.4	Trade Capture & Enrichment	Trade capture system outage; interface failure between front and middle office	Incomplete or inaccurate trade records	Near-real-time trade replication; fallback capture tools; reconciliation rehearsals
1.5	Trade Validation & Verification	Data integrity failure due to malware; middle-office system degradation	Undetected trade errors; downstream settlement issues	Segregation of duties; automated exception alerts; ICT resilience testing
1.6	Trade Confirmation & Affirmation	Secure messaging platform outage (e.g., SWIFT or equivalent); cyber spoofing attempt	Delayed or disputed confirmations	Alternate confirmation channels; message authentication controls; cyber fraud simulations
1.7	Trade Settlement Instruction & Clearing	Clearing system unavailability; ransomware attack on settlement systems	Settlement failure; liquidity and counterparty risk	Offline settlement procedures; immutable backups; coordination tests with clearing houses
1.8	Post-Trade Reconciliation & Exception Handling	Reconciliation tool failure; data mismatch from ICT integration error	Unresolved breaks; operational backlog	Daily reconciliation thresholds; surge staffing plans; system recovery time testing
1.9	Trade Reporting & Regulatory Compliance	Regulatory reporting platform outage close to submission deadline; data loss incident	Late or inaccurate regulatory submissions; supervisory findings	Pre-submission data validation; manual reporting templates; ICT recovery drills aligned to reporting timelines
1.10	Client Settlement & Confirmation Delivery	Client portal outage; email system compromise; data leakage incident	Clients do not receive settlement advice; trust erosion	Multi-channel delivery (portal/email/SFTP); cyber awareness drills; client communication playbooks

Banner [Summing] [OR] [E3] Perform Scenario Testing

Scenario testing for CBS-1 Securities Broking & Trade Execution enables Kenanga Investment Bank to move beyond compliance-driven continuity planning toward demonstrable operational resilience.

By designing scenarios that reflect realistic market stress, ICT failures, cyber threats, and third-party disruptions, management gains clarity on whether important business services can remain within defined impact tolerances—even under extreme conditions.

Consistent with the BNM 2025 Operational Resilience Discussion Paper, the emphasis is not on preventing disruption entirely, but on anticipating failure, limiting harm, and recovering in an orderly manner.

The evidence of proactive risk management—such as tested fallback arrangements, cyber-resilience measures, and cross-functional response playbooks—provides regulators, clients, and stakeholders with confidence that Kenanga Investment Bank can continue to execute securities trades safely, fairly, and reliably in times of stress.

Resilience by Design: Kenanga Investment Bank’s Operational Resilience Journey
eBook 3: Starting Your OR Implementation
CBS-1 Securities Broking & Trade Execution
CBS-1 DP	CBS-1 MD	CBS-1 MPR	CBS-1 ITo	CBS-1 SuPS	CBS-1 ST

Gain Competency: 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.

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