[OR] [MBT] [E3] [CBS] [8] [ST] Perform Scenario Testing

Sub-CBS Code

Sub-CBS

Recommended Scenario Test Themes

Impact/Effect

Evidence of Proactive Risk Management Action

8.1

Client Onboarding and Profiling

Test data breach scenarios, fraudulent client data entry, and system downtime.

Data breaches, fraud, system downtime, and incorrect client information can delay onboarding and compromise security.

Multi-factor authentication, encryption of client data, and robust data validation procedures.

8.2

Investment Advisory and Portfolio Management

Simulate market crashes, algorithmic failures, data corruption, and portfolio mismanagement.

Incorrect portfolio management, system errors, and market volatility are leading to client losses and dissatisfaction.

Regular updates to portfolio management software, diversified investment strategies, and stress-testing portfolios.

8.3

Trust Account Establishment and Administration

Test failure in account setup, data corruption, and inability to access trust funds.

Mismanagement of trust accounts and inability to access funds during disruptions.

Backup systems, disaster recovery protocols, and access control measures for account management.

8.4

Fund and Asset Management Operations

Simulate liquidity crises, errors in asset valuation, and failures in fund operations.

Disruption in fund operations, asset loss, and liquidity issues are affecting client trust.

Real-time monitoring systems, automated checks for asset management, and contingency plans for liquidity crises.

8.5

Wealth and Estate Planning Services

Simulate loss of records, errors in inheritance calculations, and regulatory non-compliance.

Inaccurate wealth planning, client dissatisfaction, and potential legal issues from mismanagement.

Regular audits, system updates, and employee training on compliance with evolving tax laws and inheritance rules.

8.6

Regulatory and Fiduciary Compliance Management

Test failure to meet regulatory deadlines, reporting discrepancies, and external audit issues.

Non-compliance with regulations, reporting failures, and legal penalties.

Real-time compliance tracking, regular internal audits, and automated compliance management systems.

8.7

Client Reporting and Relationship Management

Simulate errors in client report generation, communication system failures, and delays in relationship management.

Loss of client trust, incorrect reports, and communication breakdowns.

Automated reporting systems with error-checking and regular testing of communication systems.

8.8

Custodial and Safekeeping Services

Simulate security breaches, asset loss, and failures in safekeeping services (including both physical and digital assets).

Loss or damage to assets, compromised security, and failure to safeguard client property.

Strong security protocols, regular system security checks, and asset recovery contingency plans.