Scenario testing for CBS-1 Reinsurance Underwriting & Pricing enables Malaysian Life Reinsurance to test whether this critical business service can continue to operate within acceptable impact tolerances under severe but plausible disruptions.
In line with BNM’s expectations, scenario testing goes beyond traditional risk assessment by stress-testing end-to-end service delivery, focusing on operational vulnerabilities across people, processes, technology, data, third-party dependencies, and governance.
For underwriting and pricing, this is particularly critical as failures may result in mispriced risks, regulatory breaches, capital strain, or loss of cedant confidence.
This chapter applies scenario testing as a learning and design tool, not a compliance exercise.
Each scenario theme is designed to test the resilience of a specific underwriting or pricing process, explicitly integrating Cyber and ICT risk considerations, as highlighted by BNM as a key cross-cutting vulnerability.
The outcomes of these tests provide evidence-based insights that support proactive remediation, decision-making, and continuous improvement of MLRe’s operational resilience posture.
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Sub-CBS Code |
Sub-CBS |
Recommended Scenario Test Themes (incl. Cyber & ICT Integration) |
Impact / Effect |
Evidence of Proactive Risk Management Action |
|
1.1 |
Risk Appetite & Strategy Setting |
Board-level decision-making disruption due to loss of access to strategic risk dashboards following a cyber incident |
Misalignment between underwriting strategy and capital/ risk appetite; delayed strategic responses |
Pre-defined alternative decision packs; offline risk appetite statements; Board crisis-decision playbooks |
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1.2 |
Data Acquisition & Validation |
Corruption or unavailability of cedant data due to a data-integrity cyber breach at the third-party data provider |
Inaccurate risk assumptions; delayed underwriting timelines |
Data validation controls; secondary data sources; third-party ICT resilience assessments |
|
1.3 |
Risk Modelling & Pricing Analytics |
Prolonged outage of actuarial modelling platforms due to cloud service failure or ransomware attack |
Inability to generate pricing models; reliance on outdated assumptions |
Model contingency methodologies; manual override pricing thresholds; ICT recovery testing results |
|
1.4 |
Underwriting Submission Intake |
Surge in submissions combined with workflow system failure from DDoS attack |
Backlog of submissions; breach of service turnaround expectations |
Manual intake procedures; prioritisation rules; cyber incident response integration with underwriting ops |
|
1.5 |
Underwriting Risk Assessment |
Loss of key underwriting specialists during a concurrent ICT outage and a scenario of people's unavailability |
Inconsistent risk decisions; increased operational error |
Cross-training of underwriters; documented risk assessment guidelines; role substitution planning |
|
1.6 |
Pricing & Quotation Formulation |
Pricing tool malfunction caused by unauthorised system changes or failed patching |
Incorrect quotations issued; financial and reputational impact |
Change-management controls; pricing validation checks; post-incident pricing review triggers |
|
1.7 |
Regulatory & Compliance Review |
Inability to access the regulatory rules repository due to an internal system compromise |
Non-compliant underwriting decisions; regulatory exposure |
Offline compliance checklists; regulatory escalation protocols; compliance scenario rehearsals |
|
1.8 |
Decision Governance & Approval |
Failure of the electronic approval workflow during the peak underwriting cycle |
Delayed deal approvals; loss of business opportunities |
Delegation of authority matrices; manual approval fallbacks; governance continuity procedures |
|
1.9 |
Documentation & Contract Issuance |
Document management system outage following malware infection |
Delayed contract issuance; legal uncertainty with cedants |
Pre-approved contract templates; secure document backups; alternative issuance channels |
|
1.10 |
Portfolio Monitoring & Experience Analysis |
Data analytics platform disruption is impacting loss experience monitoring |
Late detection of adverse trends; capital and pricing risk |
Periodic manual portfolio reviews, diversified analytics tools, and resilience testing of MI systems |
|
1.11 |
Exception & Escalation Handling |
Escalation channels are unavailable during a cyber-related communication outage |
Delayed resolution of underwriting exceptions; governance breakdown |
Multi-channel escalation paths; crisis communication tree; escalation drills |
|
1.12 |
Reporting & Feedback Loop |
Regulatory and management reporting is delayed due to ICT system recovery prioritisation conflicts |
Reduced management oversight; delayed corrective actions |
Reporting prioritisation framework; alternative reporting formats; post-incident lessons-learned reviews |
Scenario testing for CBS-1 Reinsurance Underwriting & Pricing provides Malaysian Life Reinsurance with a practical mechanism to validate whether its most critical underwriting activities can withstand disruption while continuing to deliver fair, compliant, and financially sound outcomes.
By testing severe yet plausible scenarios, including cyber- and ICT-led disruptions, MLRe gains visibility into operational vulnerabilities that may not surface from traditional risk assessments or control testing alone.
More importantly, the evidence generated through these scenario tests supports proactive risk management actions, aligning with BNM’s expectation that financial institutions demonstrate learning, adaptation, and investment in resilience capabilities.
When embedded into regular governance, underwriting reviews, and technology planning, scenario testing becomes a strategic enabler—strengthening confidence among regulators, cedants, and internal stakeholders that MLRe can sustain its underwriting and pricing services even under stress.
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Building Organisational Resilience: An Operational Resilience Guide for Malaysian Life Reinsurance |
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| eBook 3: Starting Your OR Implementation |
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| CBS-1 Reinsurance Underwriting & Pricing | |||||
| CBS-1 DP | CBS-1 MD | CBS-1 MPR | CBS-1 ITo | CBS-1 SuPS | CBS-1 ST |
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.
To learn more about the course and schedule, click the buttons below for the OR-300 Operational Resilience Implementer course and the OR-5000 Operational Resilience Expert Implementer course.
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