Operational resilience requires financial institutions to define the level of disruption they can tolerate for each Critical Business Service (CBS) before causing intolerable harm to customers, counterparties, financial stability, or regulatory standing.
In line with the expectations outlined in the 2025 Discussion Paper on Operational Resilience by Bank Negara Malaysia (BNM), impact tolerance must be expressed in measurable terms such as time, volume, data loss, and service degradation thresholds.
For CBS-2 Claims Processing & Settlement, the ability to process and settle claims accurately and promptly is central to maintaining cedant trust, meeting contractual obligations, and safeguarding market confidence.
Disruptions to this CBS may result in financial loss to cedants, reputational erosion, regulatory breaches, and systemic confidence risk—particularly during catastrophe events or high-volume mortality scenarios.
This chapter defines appropriate impact tolerances for each Sub-CBS within CBS-2, translating operational resilience principles into measurable thresholds such as Maximum Tolerable Downtime (MTD) and Maximum Tolerable Data Loss (MTDL), together with qualitative customer and regulatory impact considerations.
|
Sub-CBS Code |
Sub-CBS |
Maximum Tolerable Downtime (MTD) |
Maximum Tolerable Data Loss (MTDL) |
Customer Impact |
Regulatory Impact |
Impact Type |
Current Resilience Status |
Action Required |
|
2.1 |
Claim Notification & Receipt |
24 hours |
Near-zero (≤15 minutes transactional data) |
Delay in claim registration; cedant dissatisfaction |
Breach of service standards and reporting timelines |
Operational / Reputational |
Moderate – manual fallback exists |
Enhance automated intake redundancy and offsite replication |
|
2.2 |
Document & Data Verification |
48 hours |
≤1 hour |
Slower validation; backlog accumulation |
Risk of inaccurate regulatory data submission |
Operational / Compliance |
Moderate |
Implement workflow prioritisation and digital document repository DR |
|
2.3 |
Preliminary Assessment & Triage |
48 hours |
≤1 hour |
Delayed classification of urgent claims (e.g., catastrophe events) |
Supervisory concern during systemic events |
Operational / Prudential |
Moderate |
Define catastrophe surge protocol and alternate-site capability |
|
2.4 |
Detailed Claims Assessment |
3 working days |
≤4 hours |
Financial uncertainty for cedants; potential liquidity strain |
Risk of delayed settlement affecting solvency reporting |
Financial / Compliance |
Developing |
Strengthen remote access and specialist cross-training |
|
2.5 |
Third-Party Engagement & Investigation |
5 working days |
≤1 day (documentation records) |
Delay in complex claim resolution |
Limited direct regulatory breach but reputational exposure |
Operational / Reputational |
Moderate |
Formalise alternate vendor panel and SLA resilience testing |
|
2.6 |
Claims Decisioning & Approval |
48 hours |
≤1 hour |
Delayed approval; cedant dissatisfaction |
Breach of contractual and governance standards |
Governance / Compliance |
Strong core controls |
Implement dual-site approval workflow and delegated authority backup |
|
2.7 |
Settlement Calculation & Fund Disbursement |
24 hours (post-approval) |
Near-zero (≤15 minutes of financial records) |
Direct financial impact to cedants; liquidity and trust erosion |
High – potential breach of prudential and payment system requirements |
Financial / Systemic |
Strong but dependent on payment systems |
Test alternate banking channels and payment contingency procedures |
|
2.8 |
Claim Communication & Reporting |
48 hours |
≤4 hours |
Reduced transparency; reputational damage |
Breach of regulatory disclosure timelines |
Reputational / Compliance |
Moderate |
Implement automated communication templates and backup communication channels |
|
2.9 |
Record Archival & Compliance Reporting |
5 working days |
Zero tolerance for permanent loss |
Risk of audit findings; inability to evidence decisions |
High – statutory record retention breach |
Compliance / Legal |
Moderate |
Enhance immutable backup storage and periodic restoration testing |
|
2.10 |
Continuous Improvement & Analytics |
10 working days |
≤1 day |
Limited short-term customer impact |
Low immediate regulatory risk |
Strategic / Governance |
Developing |
Improve data warehouse resilience and analytics backup capability |
The tolerances above reflect principles emphasised in the 2025 BNM Discussion Paper, including:
For example:
Establishing impact tolerances for CBS-2 Claims Processing & Settlement provides Malaysian Life Reinsurance with a measurable boundary between acceptable disruption and intolerable harm. By defining explicit MTD and MTDL thresholds for each Sub-CBS, the organisation can:
Impact tolerance is not static. It must be reviewed periodically in light of business growth, digital transformation, outsourcing dependencies, and emerging systemic risks.
For a reinsurer whose credibility depends on timely and accurate claims settlement, maintaining resilience within these defined tolerances is fundamental to sustaining market confidence and long-term stability.
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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-2 Claims Processing & Settlement | |||||
| CBS-2 DP | CBS-2 MD | CBS-2 MPR | CBS-2 ITo | CBS-2 SuPS | CBS-2 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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