The organisation discussed in this chapter is Malaysian Life Reinsurance (MLRe), a key reinsurer within Malaysia’s life insurance ecosystem.
As a reinsurer, MLRe’s Claims Processing & Settlement function is critical not only to its direct cedants but also to broader financial system stability.
In line with operational resilience expectations articulated by Bank Negara Malaysia (BNM), scenario testing for CBS-2 must go beyond business continuity testing and assess the organisation’s ability to remain within defined impact tolerances during severe but plausible disruptions, including cyber and ICT-related events.
This chapter outlines the recommended scenario-testing approach for CBS-2 Claims Processing & Settlement.
It integrates operational, cyber, ICT, third-party, and regulatory risk considerations, consistent with principles described in “[OR] [P2-S4] What is Scenario Testing in Operational Resilience?” and aligned with themes from the 2025 BNM Discussion Paper on Operational Resilience.
|
Sub-CBS Code |
Sub-CBS |
Recommended Scenario Test Themes (Including Cyber & ICT Integration) |
Impact / Effect |
Evidence of Proactive Risk Management Action |
|
2.1 |
Claim Notification & Receipt |
• Cyberattack (DDoS) on claims submission portal • Email system outage due to ransomware • Surge in claims following pandemic/mass casualty event • Data breach of claimant information |
Inability to receive claims within impact tolerance; delayed acknowledgement; reputational damage; regulatory breach |
• Tested alternate submission channels (manual/email hotline) • Cyber incident response drill report • Surge capacity playbook • Portal penetration test & DDoS simulation results |
|
2.2 |
Document & Data Verification |
• Core claims system outage (ICT failure) • Corrupted document management database • AI/automation misclassification error • Insider data manipulation |
Incorrect or delayed verification; fraud risk increases; breach of data integrity |
• System recovery (RTO/RPO) test results • Data integrity validation logs • Segregation-of-duty review evidence • AI model validation & override testing |
|
2.3 |
Preliminary Assessment & Triage |
• Loss of remote access/VPN failure • Workforce unavailability (pandemic, strike) • Cyber compromise of triage workflow tool |
Backlog accumulation; prioritisation errors; SLA breach |
• Remote access failover testing • Workforce cross-training matrix • Manual triage fallback procedure tested • Capacity stress test documentation |
|
2.4 |
Detailed Claims Assessment |
• Extended outage of actuarial/underwriting support systems • Fraud ring exploitation during system disruption • Data exfiltration of medical records |
Inaccurate claim valuation; financial misstatement; regulatory non-compliance |
• Red-team cyber simulation report • Fraud analytics scenario stress test • Independent claims file review results • Actuarial contingency assessment framework |
|
2.5 |
Third-Party Engagement & Investigation |
• Critical TPA (Third Party Administrator) system breach • Vendor insolvency • Cross-border data transfer restriction • Cloud service outage |
Investigation delays, legal exposure, breach of outsourcing guidelines |
• Third-party resilience assessment results • Exit & substitution plan tested • Cloud failover test evidence • Updated outsourcing risk register |
|
2.6 |
Claims Decisioning & Approval |
• Decision engine algorithm failure • Board/committee approval workflow disruption • Targeted phishing attack on approvers |
Erroneous approvals/declines; fraud; financial loss |
• Decision override and escalation test records • Multi-factor authentication test logs • Phishing simulation campaign results • Governance committee contingency minutes |
|
2.7 |
Settlement Calculation & Fund Disbursement |
• Payment gateway outage • Core banking interface failure • Cyberattack altering payment instructions • Liquidity stress event |
Payment delay beyond tolerance; financial loss; systemic confidence impact |
• Dual-control payment testing logs • SWIFT/payment reconciliation test evidence • Treasury liquidity stress simulation • Payment rerouting exercise documentation |
|
2.8 |
Claim Communication & Reporting |
• Mass notification system outage • Social media misinformation campaign • CRM system data loss |
Reputational damage; stakeholder distrust; regulatory complaint |
• Crisis communication tabletop exercise • Media response simulation • CRM backup restoration test report • Social listening monitoring evidence |
|
2.9 |
Record Archival & Compliance Reporting |
• Regulatory reporting system failure • Incomplete archival due to storage corruption • Ransomware attack encrypting archives |
Non-compliance with BNM reporting timeline; audit findings |
• Backup restoration test results • Regulatory reporting dry-run exercise • Immutable backup implementation evidence • Audit trail validation testing |
|
2.10 |
Continuous Improvement & Analytics |
• Data warehouse corruption • Cyber manipulation of analytics outputs • BI tool outage during management reporting cycle |
Misleading management decisions; weak risk detection |
• Data reconciliation testing • Independent model validation • Business Intelligence recovery test • Periodic OR dashboard validation exercise |
Across all Sub-CBS processes, scenario testing explicitly integrates:
This aligns with BNM’s expectations that operational resilience testing must incorporate cyber resilience, outsourcing risk, data governance, and systemic risk interdependencies rather than treating them as isolated control domains.
Scenario testing for CBS-2 at Malaysian Life Reinsurance is not merely an extension of business continuity exercises; it is a structured assessment of the organisation’s ability to remain within defined impact tolerances during severe but plausible operational, cyber, ICT, and third-party disruptions.
By linking each Sub-CBS to realistic disruption themes and requiring documented evidence of proactive risk management action, MLRe demonstrates to regulators, cedants, and stakeholders that it understands its vulnerabilities and actively strengthens its resilience posture.
A mature scenario testing programme enables MLRe to identify single points of failure, validate recovery strategies, test decision-making under stress, and continuously enhance operational robustness.
Ultimately, effective scenario testing reinforces confidence that even under extreme but plausible events, the Claims Processing & Settlement service will continue to operate within acceptable thresholds, preserving financial stability and market trust.
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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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