What is the Triple Line of Defense?
The triple line of defense is a risk management framework that provides a systematic approach for organizations to manage risk effectively. The three lines of defense are:
The first line of defense: This refers to the operational management of an organization, including the employees who carry out day-to-day activities. They are responsible for identifying and managing risks within their areas of responsibility. The first line of defense is responsible for implementing the policies and procedures established by senior management to manage risk.
The second line of defense: This refers to the risk management and compliance functions within an organization, such as risk management, compliance, and audit departments. They are responsible for overseeing the first line of defense and ensuring that risks are identified, assessed, and managed effectively. The second line of defense provides guidance and support to the first line of defense in managing risk.
The third line of defense: This refers to the internal audit function within an organization. Internal auditors provide independent and objective assurance to senior management and the board of directors that the organization’s risk management, governance, and internal control processes are functioning effectively. The third line of defense assesses the effectiveness of the first and second lines of defense in managing risk.
The triple line of defense model provides a clear delineation of roles and responsibilities for managing risk within an organization and helps to ensure that there is appropriate oversight and accountability at all levels of the organization. By using this framework, organizations can better identify, assess, and manage risks, and ensure that they are operating sustainably and responsibly.