Issues due to malfunction and sabotage would occur randomly and from what I understand (I've yet to use the feature) would typically involve things on your boat breaking down unexpectedly or simply not working from the get-go because they either just break, as things sometimes do, or were tampered with in the shipyard.
If you are really curious about the types of things that might happen, go to your Commander installation and look in the Cfg folder - there's a file there called Randomised events.cfg... scroll down a bit and you'll find a secton for MALFUNCTION SETTINGS and even further down, one for SABOTAGE OVERLAY. Those sections contain details on what *could* crop up on any given patrol if you have the feature enabled.
If you enable the feature it's recommended that you test all your systems as thoroughly as possible at the start of a patrol, before you get deep into enemy territory and find out that some vital bit of equipment is not working properly.
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