[OR] [KIB] [E3] [CBS] [1] [SuPS] Identify Severe but Plausible Scenarios

CBS-1 Securities Broking & Trade Execution

Introduction

In the context of financial institutions, operational resilience refers to the ability to prevent, adapt to, respond to, recover from, and learn from operational disruptions that could threaten the continuity of critical business services.

Severe but Plausible Scenarios are hypothetical disruptive events that are both significant in impact and realistic enough to stress organisational resilience capabilities.

These scenarios go beyond routine incidents and are designed to assess whether a firm can deliver essential services such as securities broking and trade execution under stress conditions, consistent with regulatory expectations (e.g., Bank Negara Malaysia’s 2025 Operational Resilience Discussion Paper, which stresses the importance of maintaining critical financial services, including amid cyber and technology risks).

The table below outlines recommended scenarios for each Sub-CBS of CBS-1 Securities Broking & Trade Execution, their potential impacts, proactive risk management actions, and how they link to Cyber and ICT risks integration.

Table P5: Identify Severe but Plausible Scenarios for CBS-1

Sub-CBS Code	Sub-CBS	Severe but Plausible Scenario	Impact / Effect	Proactive Risk Management Action	Link to Integration of Cyber & ICT Risks
1.1	Client Onboarding & Order Intake	Major outage of OMS/CRM due to a ransomware attack that corrupts the onboarding database	Delayed client onboarding; inability to intake orders; potential regulatory and reputational loss	Implementation of data backup strategy, multi-factor authentication, and ransomware drills	Cyber resilience is essential; ICT asset hardening and phishing controls
1.2	Order Validation & Pre-Trade Checks	An incorrect market data feed was triggered by a supply chain compromise	Invalid trades or breaches of pre-trade controls; financial exposure	Real-time market data verification and fallbacks to secondary feeds	Continuous monitoring of third-party feeds; ICT supply chain risk management
1.3	Order Routing & Trade Execution	DDoS attacks during peak market volatility	Order routing delays, failed execution, loss of trading opportunities	Redundant network infrastructure and DDoS mitigation services	Integration of cybersecurity controls into trading systems
1.4	Trade Capture & Enrichment	Middleware failure due to a corrupted software patch	Inaccurate trade attributes; settlement mismatches	Strict patch testing and rollback procedures; automated reconciliation	ICT change management and secure software deployment
1.5	Trade Validation & Verification	Insider threat manipulating verification processes	Undetected mismatches; regulatory breaches	Segregated duties, user activity monitoring, robust audit trails	Cyber monitoring tooling and privileged access management
1.6	Trade Confirmation & Affirmation	Confirmation system crashed during market close	Clients not affirmed; disputes increase; penalties from exchanges	High-availability architecture and disaster recovery rehearsals	Redundant ICT infrastructure and recovery procedures
1.7	Trade Settlement Instruction & Clearing	SWIFT or CLS connectivity failure caused by a global incident	Deferred settlements; liquidity strain	Alternative settlement channels; liquidity buffers; pre-settlement checks	Integration of ICT resilience with core transaction systems
1.8	Post-Trade Reconciliation & Exception Handling	Reconciliation engine corrupted by data integrity attack	Failure to detect unmatched trades; operational risk spike	Encrypted data integrity checks; anomaly alerts; manual override	Data integrity controls and secure reconciliation tooling
1.9	Trade Reporting & Regulatory Compliance	Regulatory reporting API breached; leaked data	Compliance fines; stakeholder confidence loss	End-to-end encryption, API security gateways, and logging	Deep integration of cyber risk into regulatory reporting tech
1.10	Client Settlement & Confirmation Delivery	Client messaging platform hacked; confirmations not delivered	Increased client complaints; litigation risk	Multi-channel delivery verification; secure client portals	Secure communications protocols; anti-spoofing controls

Key Notes on Integration of Cyber & ICT Risks

Operational resilience for financial institutions today cannot be separated from Cyber and ICT risks, as many severe operational disruptions originate from malicious actors, software failures, or technology dependencies.

Events such as ransomware, DDoS attacks, compromised third-party services, or flawed software changes have all been observed as real-world drivers of major service disruptions across financial markets.

Institutions must embed cyber and ICT risk assessments into their operational resilience frameworks to proactively anticipate, test, and mitigate these scenariosproactively —for example, by enforcing secure coding standards, managing third-party vendor risk, and conducting regular resilience stress tests aligned with severe yet plausible scenarios.

Banner [Summing] [OR] [E3] Identify Severe but Plausible Scenarios

Identifying Severe but Plausible Scenarios for CBS-1 Securities Broking & Trade Execution is central to Kenanga Investment Bank’s operational resilience planning.

These scenarios serve as a strategic lens through which risk managers can assess readiness and the capacity to withstand and recover from high-impact disruptions affecting critical business processes.

By mapping proactive risk management actions — such as enhanced cyber controls, resilient ICT architecture, comprehensive incident response plans, and redundancy strategies — Kenanga can strengthen its ability to deliver essential services within impact tolerances during adverse conditions, while also satisfying emerging regulatory expectations from frameworks like Bank Negara Malaysia’s 2025 discussion on operational resilience.

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