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3 Lines of Defence Risk Management: A Cornerstone of Modern Enterprise Resilience
By Dr. Eleanor Vance, PhD, CISA, CRISC
_Dr. Eleanor Vance is a globally recognized expert in risk management with over 20 years of experience in the financial services and technology sectors. She holds a PhD in Risk Management from the University of Oxford and is a Certified Information Systems Auditor (CISA) and a Certified in Risk and Information Systems Control (CRISC)._
Published by: The Risk Management Institute (RMI) – _A leading global provider of risk management training, research, and publications, known for its rigorous standards and industry-leading experts._
Edited by: Mr. David Chen, _a seasoned editor with 15 years of experience in financial and technological publications, specializing in risk management and compliance._
Introduction:
In today's dynamic and increasingly complex business environment, effective risk management is no longer a luxury but a necessity. The traditional approach of relying solely on internal audit has given way to a more robust and comprehensive framework: the 3 lines of defence risk management model. This model establishes a clear division of responsibilities across three distinct lines, ensuring comprehensive risk coverage and effective mitigation strategies. Understanding and implementing a robust 3 lines of defence risk management framework is crucial for organizations striving for resilience and sustained success. This article delves into the intricacies of this model, exploring its implications for various industries and providing practical guidance for its effective implementation.
H1: Understanding the Three Lines of Defence
The 3 lines of defence risk management model designates distinct roles and responsibilities for managing risk across the organization. This layered approach creates checks and balances, enhancing the overall effectiveness of risk management processes.
Line 1: Operational Management: This is the first line of defence and comprises the individuals and teams responsible for day-to-day operations. They are directly involved in identifying, assessing, and controlling risks inherent in their specific activities. Line 1 ownership is paramount. They are responsible for implementing and monitoring controls to prevent and mitigate risks. Examples include establishing robust processes, conducting regular self-assessments, and implementing key performance indicators (KPIs) to monitor risk levels.
Line 2: Risk Management and Compliance: The second line of defence provides independent oversight and assurance over Line 1's risk management activities. This function typically encompasses risk management, compliance, and internal control functions. They design and implement policies, procedures, and frameworks; they monitor the effectiveness of Line 1 controls, provide guidance and support, and challenge Line 1’s risk assessments. They also often develop and deliver training programs to enhance risk awareness.
Line 3: Internal Audit: The third line of defence provides independent assurance over the effectiveness of the entire risk management framework, including both Line 1 and Line 2 activities. Internal audit performs independent assessments, reviews, and audits to evaluate the design and operating effectiveness of controls. They report their findings to senior management and the audit committee, providing an unbiased perspective on the organization's risk profile and the effectiveness of its management.
H2: Implications for Different Industries
The application of the 3 lines of defence risk management model varies across different industries due to their unique risk profiles and regulatory environments.
Financial Services: Given the stringent regulatory requirements and potential for significant financial losses, the financial services industry heavily relies on a well-defined 3 lines of defence model. This often includes robust risk appetite frameworks, independent risk assessments, and stringent internal audit procedures.
Healthcare: In the healthcare sector, patient safety and data privacy are paramount. The 3 lines of defence model ensures that risks related to patient care, data breaches, and compliance with healthcare regulations are effectively identified, assessed, and mitigated.
Technology: The technology industry faces unique risks related to cybersecurity, data breaches, and intellectual property theft. The 3 lines of defence model enables organizations to proactively manage these risks through robust security protocols, vulnerability assessments, and penetration testing.
H3: Challenges and Considerations in Implementing 3 Lines of Defence Risk Management
Implementing a successful 3 lines of defence risk management framework requires careful planning and consideration of several key challenges:
Defining Clear Roles and Responsibilities: Ambiguity in roles and responsibilities can lead to overlaps, gaps, and inefficiencies. A well-defined framework with clear responsibilities for each line of defence is crucial.
Effective Communication and Collaboration: Open communication and collaboration between the three lines of defence are essential for effective risk management. Regular communication channels and collaborative platforms should be established.
Resource Allocation: Adequate resources, including personnel, technology, and budget, are needed to support the effective operation of each line of defence.
Maintaining Independence: The independence of Line 2 and Line 3 is critical for providing objective assurance. Maintaining appropriate organizational structures and reporting lines is vital.
H4: Benefits of a Robust 3 Lines of Defence Risk Management Framework
The implementation of a robust 3 lines of defence risk management framework offers numerous benefits, including:
Improved Risk Identification and Assessment: A layered approach allows for a more comprehensive identification and assessment of risks, minimizing blind spots.
Enhanced Risk Mitigation: Proactive mitigation strategies can be implemented across all three lines, reducing the likelihood and impact of risks.
Increased Regulatory Compliance: A well-structured framework helps organizations meet regulatory requirements and avoid penalties.
Improved Operational Efficiency: Effective risk management can streamline processes, reduce operational disruptions, and enhance overall efficiency.
Strengthened Organizational Resilience: A robust framework helps organizations withstand and recover from unexpected events and crises.
Conclusion:
The 3 lines of defence risk management model represents a significant advancement in organizational risk management. By establishing a clear division of responsibilities and fostering collaboration between the three lines of defence, organizations can significantly enhance their ability to identify, assess, and mitigate risks, ultimately driving greater resilience and achieving sustainable success in an increasingly volatile business environment. Embracing this framework is not merely a best practice; it's a strategic imperative for organizations seeking to thrive in today's challenging landscape.
FAQs:
1. What is the difference between Line 2 and Line 3 in the 3 lines of defence model? Line 2 provides oversight and assurance of Line 1’s activities, while Line 3 provides independent assurance over both Line 1 and Line 2.
2. How can organizations ensure the independence of Line 3 (Internal Audit)? Through clear reporting lines to the audit committee, distinct organizational structures, and robust professional standards.
3. What are the key performance indicators (KPIs) for measuring the effectiveness of a 3 lines of defence model? This depends on the organization, but examples include risk event frequency, severity of impact, time to resolution, and the number of audit findings.
4. How can organizations address conflicts between the three lines of defence? Through established escalation procedures, clear communication channels, and a collaborative approach to resolving disagreements.
5. How does the 3 lines of defence model adapt to changes in the regulatory environment? By regularly reviewing and updating policies, procedures, and frameworks to reflect evolving regulations.
6. What role does technology play in supporting the 3 lines of defence? Technology can automate tasks, improve data analysis, and facilitate communication and collaboration across the three lines.
7. How can small and medium-sized enterprises (SMEs) implement the 3 lines of defence model? By adapting the framework to their size and resources, potentially consolidating some functions.
8. What are the common pitfalls to avoid when implementing a 3 lines of defence model? Lack of clear roles, inadequate resources, poor communication, and insufficient independence.
9. How often should the 3 lines of defence model be reviewed and updated? Regularly, at least annually, and more frequently if significant changes occur in the organization or its risk profile.
Related Articles:
1. "Optimizing the 3 Lines of Defence: A Practical Guide for Financial Institutions": This article provides practical advice on adapting the 3 lines of defence model to the specific challenges faced by financial institutions.
2. "The Role of Technology in Enhancing the 3 Lines of Defence": This article explores how technology can be leveraged to improve the effectiveness and efficiency of the 3 lines of defence.
3. "Measuring the Effectiveness of the 3 Lines of Defence: Key Performance Indicators and Metrics": This article discusses the key metrics used to measure the effectiveness of the 3 lines of defence.
4. "Addressing Conflicts and Improving Collaboration across the 3 Lines of Defence": This article offers practical strategies for resolving conflicts and improving collaboration between the three lines of defence.
5. "The 3 Lines of Defence in the Age of Cybersecurity Threats": This article focuses on the application of the 3 lines of defence model to manage cybersecurity risks.
6. "Case Study: Successful Implementation of the 3 Lines of Defence in a Healthcare Organization": This article presents a real-world example of how a healthcare organization successfully implemented the 3 lines of defence.
7. "Regulatory Compliance and the 3 Lines of Defence: A Comparative Analysis": This article compares how different regulatory environments affect the implementation of the 3 lines of defence.
8. "Building a Culture of Risk Management: The Importance of Training and Awareness in the 3 Lines of Defence": This article highlights the role of training and awareness in building a robust risk culture within an organization.
9. "The Future of the 3 Lines of Defence: Emerging Trends and Technologies": This article explores future trends and technological advancements that will shape the 3 lines of defence model.
| 3 lines of defence risk management: Bank Regulation Anna-Karin Stockenstrand, Fredrik Nilsson, 2017-01-20 Bank Regulation: Effects on Strategy, Financial Accounting and Management Control discusses and problematizes how regulation is affecting bank strategies as well as their financial accounting and management control systems. Following a period of bank de-regulation, the new millennium brought a drastic change, with many new regulations. Some of these are the result of the financial crisis of 2008-2009. Other regulations, such as the introduction in 2005 of International Financial Reporting Standards (IFRS) for quoted companies in the EU, can be related to the introduction of a new global accounting regime. It is evident from annual reports of banks that the number of new regulations in recent years is high and that they cover many different functional areas. The objectives of these regulations are also ambitious; to improve governance and control, contributing to a high level of financial stability for banks. These objectives are obviously of great concern for an industry that directly and indirectly affects the financial situation not only of individuals and organizations but also nation states. Considering the importance of banks in society, it is of little surprise that the attention of both scholars and practitioners has been directed towards how banks comply with new regulations and if the intended objectives of the regulations are met. This book will be of great value to all those interested in financial stability matters (practitioners, policy-makers, students, academics), as well as to accounting and finance scholars. |
| 3 lines of defence risk management: Enterprise Risk Management in a Nutshell Dennis Cox, 2017-10-26 Risk management is an often-used phrase that is rarely fully embedded within the business process and procedures of firms. This book looks at the challenges faced in implementing a risk management framework as well as the key elements of such a framework. It is designed for the business professional that is not an expert in risk management and addresses all of the major risks that are likely to be faced in practice, considering the risk mitigation and measurement techniques that are most likely to be relevant. This is an intermediate book and accordingly does not focus on the mathematical elements but rather provides a readable entry text for anyone seeking information on this important subject. |
| 3 lines of defence risk management: Interest Rate Risk in the Banking Book PAUL. NEWSON, 2017 |
| 3 lines of defence risk management: Contemporary Issues in Audit Management and Forensic Accounting Simon Grima, Engin Boztepe, Peter J. Baldacchino, 2020-02-10 In the 18 chapters in this volume of Contemporary Studies in Economic and Financial Analysis, expert contributors gather together to examine the extent and characteristics of forensic accounting, a field which has been practiced for many years, but is still not internationally regulated yet. |
| 3 lines of defence risk management: World-Class Risk Management Norman Marks, 2015-06-13 Considers why many top executives do not link risk management to organisational effectiveness. Examines how risk relates to strategy-setting and identifies each risk management activity. Advises that risk is an integral part of day-to-day management rather than a periodic exercise. |
| 3 lines of defence risk management: Corporate Defense and the Value Preservation Imperative Sean Lyons, 2016-09-19 This is the first book to finally address the umbrella term corporate defense, and to explain how an integrated corporate defense program can help an organization address both value creation and preservation. The book explores the value preservation imperative, which represents an organization’s obligation to implement a comprehensive corporate defense program in order to deliver long-term sustainable value to its stakeholders. For the first time the reader is provided with a complete picture of how corporate defense operates all the way from the boardroom to the front-lines, and vice versa. It provides comprehensive guidance on how to implement a robust corporate defense program by addressing this challenge from strategic, tactical, and operational perspectives. This arrangement provides readers with a holistic view of corporate defense and incorporates the management of the eight critical corporate defense components. It includes how an organization needs to integrate its governance, risk, compliance, intelligence, security, resilience, controls and assurance activities within its corporate defense program. The book addresses the corporate defense requirement from various perspectives and helps readers to understand the critical interconnections and inter-dependencies which exist at strategic, tactical, and operational levels. It facilitates the reader in comprehending the importance of appropriately prioritizing corporate defense at a strategic level, while also educating the reader in the importance of managing corporate defense at a tactical level, and executing corporate defense activities at an operational level. Finally the book looks at the business case for implementing a robust corporate defense program and the value proposition of introducing a truly world class approach to addressing the value preservation imperative. Cut and paste this link (https://m.youtube.com/watch?v=u5R_eOPNHbI) to learn more about a corporate defense program and how the book will help you implement one in your organization. |
| 3 lines of defence risk management: Machine Learning for Auditors Maris Sekar, 2022-02-27 Use artificial intelligence (AI) techniques to build tools for auditing your organization. This is a practical book with implementation recipes that demystify AI, ML, and data science and their roles as applied to auditing. You will learn about data analysis techniques that will help you gain insights into your data and become a better data storyteller. The guidance in this book around applying artificial intelligence in support of audit investigations helps you gain credibility and trust with your internal and external clients. A systematic process to verify your findings is also discussed to ensure the accuracy of your findings. Machine Learning for Auditors provides an emphasis on domain knowledge over complex data science know how that enables you to think like a data scientist. The book helps you achieve the objectives of safeguarding the confidentiality, integrity, and availability of your organizational assets. Data science does not need to be an intimidating concept for audit managers and directors. With the knowledge in this book, you can leverage simple concepts that are beyond mere buzz words to practice innovation in your team. You can build your credibility and trust with your internal and external clients by understanding the data that drives your organization. What You Will Learn Understand the role of auditors as trusted advisors Perform exploratory data analysis to gain a deeper understanding of your organization Build machine learning predictive models that detect fraudulent vendor payments and expenses Integrate data analytics with existing and new technologies Leverage storytelling to communicate and validate your findings effectively Apply practical implementation use cases within your organization Who This Book Is For AI Auditing is for internal auditors who are looking to use data analytics and data science to better understand their organizational data. It is for auditors interested in implementing predictive and prescriptive analytics in support of better decision making and risk-based testing of your organizational processes. |
| 3 lines of defence risk management: HBR Guide to Making Better Decisions Harvard Business Review, 2020-02-11 Learn how to make better; faster decisions. You make decisions every day--from prioritizing your to-do list to choosing which long-term innovation projects to pursue. But most decisions don't have a clear-cut answer, and assessing the alternatives and the risks involved can be overwhelming. You need a smarter approach to making the best choice possible. The HBR Guide to Making Better Decisions provides practical tips and advice to help you generate more-creative ideas, evaluate your alternatives fairly, and make the final call with confidence. You'll learn how to: Overcome the cognitive biases that can skew your thinking Look at problems in new ways Manage the trade-offs between options Balance data with your own judgment React appropriately when you've made a bad choice Communicate your decision--and overcome any resistance Arm yourself with the advice you need to succeed on the job, from a source you trust. Packed with how-to essentials from leading experts, the HBR Guides provide smart answers to your most pressing work challenges. |
| 3 lines of defence risk management: Banking conduct and culture : a call for sustained and comprehensive reform , 2015 |
| 3 lines of defence risk management: Disrupting Finance Theo Lynn, John G. Mooney, Pierangelo Rosati, Mark Cummins, 2018-12-06 This open access Pivot demonstrates how a variety of technologies act as innovation catalysts within the banking and financial services sector. Traditional banks and financial services are under increasing competition from global IT companies such as Google, Apple, Amazon and PayPal whilst facing pressure from investors to reduce costs, increase agility and improve customer retention. Technologies such as blockchain, cloud computing, mobile technologies, big data analytics and social media therefore have perhaps more potential in this industry and area of business than any other. This book defines a fintech ecosystem for the 21st century, providing a state-of-the art review of current literature, suggesting avenues for new research and offering perspectives from business, technology and industry. |
| 3 lines of defence risk management: The Risk IT Framework Isaca, 2009 |
| 3 lines of defence risk management: The Key Code and Advanced Handbook for the Governance and Supervision of Banks in Australia Francesco de Zwart, 2022-10-27 This Key Code and Handbook examines the corporate governance and accountability of Major Banks, their directors and executives which were the central focus of bank, Supervisor, Regulator and governmental activity and public scrutiny in 2018 and 2019. This book explores this responsibility focus by providing evidence from the Global Financial Crisis and beyond with both APRA and ASIC investigating illegal conduct, misconduct and conduct which was below the level of community expectations. This book discusses how the Royal Commission into misconduct in the banking and financial services industry has already given rise to a detailed Final Report whose recommendations are still being put into effect. Further, this book uses evidence provided by the large number of Prudential Standards issued by APRA and investigations into the conduct of Major Banks by Regulators. This book explores governance variables – over 1,700 in number and grouped into 159 ‘key groupings’ or separate categories – which are all indexed to 28 governmental, regulatory and supervisory reports and documents to create a governance code and commentary specifically tailored to Australian banks. Each governance variable is modelled on the Stage 1 Relational Approach contained in Enhancing Firm Sustainability Through Governance. Given the huge interest in the governance of banks, Parts 1 and 2 – explaining the Relational Approach - of Stage 1 were recently published in November 2018 and June 2019 in the Australian Journal of Corporate Law. This book is the largest reference book and handbook in publication worldwide containing the structures, mechanisms, processes and protocols – the checks and balances we call ‘governance variables’ – that deeply addresses and explains banking accountability and regulation in Australia. |
| 3 lines of defence risk management: Fraud Risk Assessment Tommie W. Singleton, Aaron J. Singleton, 2011-04-12 Praise for the Fourth Edition of Fraud Auditing and Forensic Accounting Tommie and Aaron Singleton have made important updates to a book I personally rely very heavily upon: Fraud Auditing and Forensic Accounting (FAFA). In the newest edition, they take difficult topics and explain them in straightforward actionable language. All my students benefitted from reading the third edition of the FAFA to better understand the issues and area of fraud and forensic accounting. With their singular focus on understandability and practicality, this Fourth Edition of the book makes a very important contribution for academics, researchers, practitioners, and students. Bravo!—Dr. Timothy A. Pearson, Director, Division of Accounting, West Virginia University, Executive Director, Institute for Fraud Prevention Finally someone has written a book that combines fraud examination and forensic accounting. The authors have clearly explained both in their earlier edition and now they have enhanced the first with additional materials. The order in which the material is presented is easy to grasp and logically follows the 'typical' fraud examination from the awareness that something is wrong to the court case. The explanatory materials presented aid this effort by being both well placed within the book and relevant to the narrative. —Dr. Douglas E. Ziegenfuss, Chair and Professor, Department of Accounting, Old Dominion University Fraud Auditing and Forensic Accounting is a masterful compilation of the concepts found in this field. The organization of the text with the incorporation of actual cases, facts, and figures provides a logical and comprehensive basis for learning the intricacies of fraud examination and forensic accounting. The authors successfully blend the necessary basics with advanced principles in a manner that makes the book an outstanding resource for students and professionals alike.—Ralph Q. Summerford, President of Forensic/Strategic Solutions, PC |
| 3 lines of defence risk management: Integrated Assurance Vicky Kubitscheck, 2016-05-23 The need for assurance is never more acute than in times of turbulence and uncertainty. The events following the financial market crisis demonstrate the catastrophic consequence of risk taking that exceeds the board’s appetite, and of not joining up risk intelligence for sound decision making. Boards and senior management alike consistently seek the ’one truth’ about risk exposures and strength of controls but are continuing to grapple with the challenge. Much has been written about assurance and the governance of risks, but mainly by those who provide it - such as internal auditors, accountants and information security technologists - for the purpose of advancing their professional practices. Less is written for or by those in governance who need assurance for the effective discharge of their responsibilities. Regulations do not usually go beyond acknowledging its importance and rely on those in the boardroom to get it right. Studies have consistently shown the link between weak corporate governance and corporate failures. The lack of reliable assurance has often been a factor. Assurance, as an integral part of corporate governance, cannot be taken for granted. It requires conscious action across the organisation. It is time to rethink assurance beyond its usual functional boundaries, to focus on what matters to the business and how discussions in the board room can be better supported by more joined up assurance. This book provides practical guidance for those who need that support as well as those who deliver assurance. |
| 3 lines of defence risk management: Operational Risk Management Ariane Chapelle, 2019-02-04 OpRisk Awards 2020 Book of the Year Winner! The Authoritative Guide to the Best Practices in Operational Risk Management Operational Risk Management offers a comprehensive guide that contains a review of the most up-to-date and effective operational risk management practices in the financial services industry. The book provides an essential overview of the current methods and best practices applied in financial companies and also contains advanced tools and techniques developed by the most mature firms in the field. The author explores the range of operational risks such as information security, fraud or reputation damage and details how to put in place an effective program based on the four main risk management activities: risk identification, risk assessment, risk mitigation and risk monitoring. The book also examines some specific types of operational risks that rank high on many firms' risk registers. Drawing on the author's extensive experience working with and advising financial companies, Operational Risk Management is written both for those new to the discipline and for experienced operational risk managers who want to strengthen and consolidate their knowledge. |
| 3 lines of defence risk management: Organized Uncertainty Michael Power, 2007-05-24 Since the mid-1990s risk management has undergone a dramatic expansion in its reach and significance, being transformed from an aspect of management control to become a benchmark of good governance for banks, hospitals, schools, charities and many other organizations. Numerous standards for risk management practice have been produced by a variety of transnational organizations. While these many designs and blueprints are accompanied by ideals of enterprise, value production, and good governance, it is argued that the rise of risk management has also coincided with an intensification of auditing and control processes. The legalization and bureacratization of organizational life has increased because risk management has created new demands for proof and evidence of action. In turn, these demands have generated new risks to reputation. In short, this important book traces the rise of the managerial concept of risk and the different logics and values which underpin it, showing that it has much less to do with real dangers and opportunities than might be thought, and more to do with organizational accountability and legitimacy. |
| 3 lines of defence risk management: HBR's 10 Must Reads on Making Smart Decisions (with featured article "Before You Make That Big Decision..." by Daniel Kahneman, Dan Lovallo, and Olivier Sibony) Harvard Business Review, Daniel Kahneman, Ram Charan, 2013-03-05 Learn why bad decisions happen to good managers—and how to make better ones. If you read nothing else on decision making, read these 10 articles. We’ve combed through hundreds of articles in the Harvard Business Review archive and selected the most important ones to help you and your organization make better choices and avoid common traps. Leading experts such as Ram Charan, Michael Mankins, and Thomas Davenport provide the insights and advice you need to: Make bold decisions that challenge the status quo Support your decisions with diverse data Evaluate risks and benefits with equal rigor Check for faulty cause-and-effect reasoning Test your decisions with experiments Foster and address constructive criticism Defeat indecisiveness with clear accountability |
| 3 lines of defence risk management: Measuring and Managing Information Risk Jack Freund, Jack Jones, 2014-08-23 Using the factor analysis of information risk (FAIR) methodology developed over ten years and adopted by corporations worldwide, Measuring and Managing Information Risk provides a proven and credible framework for understanding, measuring, and analyzing information risk of any size or complexity. Intended for organizations that need to either build a risk management program from the ground up or strengthen an existing one, this book provides a unique and fresh perspective on how to do a basic quantitative risk analysis. Covering such key areas as risk theory, risk calculation, scenario modeling, and communicating risk within the organization, Measuring and Managing Information Risk helps managers make better business decisions by understanding their organizational risk. - Uses factor analysis of information risk (FAIR) as a methodology for measuring and managing risk in any organization. - Carefully balances theory with practical applicability and relevant stories of successful implementation. - Includes examples from a wide variety of businesses and situations presented in an accessible writing style. |
| 3 lines of defence risk management: Mastering Operational Risk Tony Blunden, John Thirlwell, 2013-10-03 A practical guide, from the basic techniques, through to advanced applications, showing you what operational risk is, and how you can manage it. Mastering Operational Risk provides a step-by-step guide from the basic elements of operational risk through to advanced applications of operational risk management. Focusing on practical applications, it gives you the knowledge needed to understand what operational risk is and puts in place a workable way of managing it. The full text downloaded to your computer With eBooks you can: search for key concepts, words and phrases make highlights and notes as you study share your notes with friends eBooks are downloaded to your computer and accessible either offline through the Bookshelf (available as a free download), available online and also via the iPad and Android apps. Upon purchase, you'll gain instant access to this eBook. Time limit The eBooks products do not have an expiry date. You will continue to access your digital ebook products whilst you have your Bookshelf installed. |
| 3 lines of defence risk management: The Pig Book Citizens Against Government Waste, 2013-09-17 The federal government wastes your tax dollars worse than a drunken sailor on shore leave. The 1984 Grace Commission uncovered that the Department of Defense spent $640 for a toilet seat and $436 for a hammer. Twenty years later things weren't much better. In 2004, Congress spent a record-breaking $22.9 billion dollars of your money on 10,656 of their pork-barrel projects. The war on terror has a lot to do with the record $413 billion in deficit spending, but it's also the result of pork over the last 18 years the likes of: - $50 million for an indoor rain forest in Iowa - $102 million to study screwworms which were long ago eradicated from American soil - $273,000 to combat goth culture in Missouri - $2.2 million to renovate the North Pole (Lucky for Santa!) - $50,000 for a tattoo removal program in California - $1 million for ornamental fish research Funny in some instances and jaw-droppingly stupid and wasteful in others, The Pig Book proves one thing about Capitol Hill: pork is king! |
| 3 lines of defence risk management: Mastering Operational Risk Tony Blunden, John Thirlwell, 2012-09-26 Operational risk is a constant concern for all businesses. It goes far beyond operations and process to encompass all aspects of business risk, including strategic and reputational risks. Within financial services, it became codified by the Basel Committee on Banking Supervision in the 1990s. It is something that needs to be taken seriously by all those involved in running, managing and leading companies. Mastering Operational Risk is a comprehensive guide which takes you from the basic elements of operational risk, through to its advanced applications. Focusing on practical aspects, the book gives you everything you need to help you understand what operational risk is, how it affects you and your business and provides a framework for managing it. Mastering Operational Risk: Shows you how to make the business case for operational risk, and how to develop effective company-wide policies Covers the essential basic concepts through to advanced managements practices Uses examples and case studies which cover the pitfalls and explains how to avoid them Provides scenario analysis and modelling techniques for you to apply to your business Operational risk arises in all businesses. It is a broad term and can relate to internal processes, people, and systems, as well as external events. All listed companies, charities and the public sector must make risk judgements and assessments and company managers have an increasing responsibility to ensure that these assessments are robust and that risk management is at the heart of their organisations. In this practical guide, Tony Blunden and John Thirlwell, recognised experts in risk management, show you how to manage operational risk and show why operational risk management really will add benefits to your business. Mastering Operational Risk includes: The business case for operational risk Risk and control assessment How to use operational risk indicators Reporting operational risk Modelling and stress-testing operational risk Business continuity and insurance Managing people risk Containing reputational damage |
| 3 lines of defence risk management: Corporate Governance Matters David Larcker, Brian Tayan, 2011-04-14 Corporate Governance Matters gives corporate board members, officers, directors, and other stakeholders the full spectrum of knowledge they need to implement and sustain superior governance. Authored by two leading experts, this comprehensive reference thoroughly addresses every component of governance. The authors carefully synthesize current academic and professional research, summarizing what is known, what is unknown, and where the evidence remains inconclusive. Along the way, they illuminate many key topics overlooked in previous books on the subject. Coverage includes: International corporate governance. Compensation, equity ownership, incentives, and the labor market for CEOs. Optimal board structure, tradeoffs, and consequences. Governance, organizational strategy, business models, and risk management. Succession planning. Financial reporting and external audit. The market for corporate control. Roles of institutional and activist shareholders. Governance ratings. The authors offer models and frameworks demonstrating how the components of governance fit together, with concrete examples illustrating key points. Throughout, their balanced approach is focused strictly on two goals: to “get the story straight,” and to provide useful tools for making better, more informed decisions. |
| 3 lines of defence risk management: Financial Enterprise Risk Management Paul Sweeting, 2017-08-07 An accessible guide to enterprise risk management for financial institutions. This second edition has been updated to reflect new legislation. |
| 3 lines of defence risk management: Corporate Governance and Risk Management in Financial Institutions Robert C. Gericke, 2018-03-27 This book presents an overview of corporate governance and risk management, analyzing their interdependence and particularly their relevance in banking. It discusses current trends in corporate governance, such as stakeholder management, financial performance and the cost of equity, compensation schemes, board structures and shareholder activism. Further, it reviews some of the most important regulatory changes introduced since the latest financial crisis and highlights their impact on the annual reports of the banks under analysis. Lastly, the book assesses and compares major banks in Brazil and Germany with special emphasis on the aspects mentioned above, revealing surprising similarities between the banking systems of these otherwise disparate countries. |
| 3 lines of defence risk management: Regulatory Cycles: Revisiting the Political Economy of Financial Crises Jihad Dagher, 2018-01-15 Financial crises are traditionally analyzed as purely economic phenomena. The political economy of financial booms and busts remains both under-emphasized and limited to isolated episodes. This paper examines the political economy of financial policy during ten of the most infamous financial booms and busts since the 18th century, and presents consistent evidence of pro-cyclical regulatory policies by governments. Financial booms, and risk-taking during these episodes, were often amplified by political regulatory stimuli, credit subsidies, and an increasing light-touch approach to financial supervision. The regulatory backlash that ensues from financial crises can only be understood in the context of the deep political ramifications of these crises. Post-crisis regulations do not always survive the following boom. The interplay between politics and financial policy over these cycles deserves further attention. History suggests that politics can be the undoing of macro-prudential regulations. |
| 3 lines of defence risk management: The Science of Risk Analysis Terje Aven, 2019-06-21 This book provides a comprehensive demonstration of risk analysis as a distinct science covering risk understanding, assessment, perception, communication, management, governance and policy. It presents and discusses the key pillars of this science, and provides guidance on how to conduct high-quality risk analysis. The Science of Risk Analysis seeks to strengthen risk analysis as a field and science by summarizing and extending current work on the topic. It presents the foundation for a distinct risk field and science based on recent research, and explains the difference between applied risk analysis (to provide risk knowledge and tackle risk problems in relation to for example medicine, engineering, business or climate change) and generic risk analysis (on concepts, theories, frameworks, approaches, principles, methods and models to understand, assess, characterise, communicate, manage and govern risk). The book clarifies and describes key risk science concepts, and builds on recent foundational work conducted by the Society for Risk Analysis in order to provide new perspectives on science and risk analysis. The topics covered are accompanied by cases and examples relating to current issues throughout. This book is essential reading for risk analysis professionals, scientists, students and practitioners, and will also be of interest to scientists and practitioners from other fields who apply risk analysis in their work. |
| 3 lines of defence risk management: Strategies to Protect the Health of Deployed U.S. Forces National Research Council, Commission on Life Sciences, Board on Environmental Studies and Toxicology, 2000-04-17 Risk management is especially important for military forces deployed in hostile and/or chemically contaminated environments, and on-line or rapid turn-around capabilities for assessing exposures can create viable options for preventing or minimizing incapaciting exposures or latent disease or disability in the years after the deployment. With military support for the development, testing, and validation of state-of-the-art personal and area sensors, telecommunications, and data management resources, the DOD can enhance its capabilities for meeting its novel and challenging tasks and create technologies that will find widespread civilian uses. Strategies to Protect the Health of Deployed U.S. Forces assesses currently available options and technologies for productive pre-deployment environmental surveillance, exposure surveillance during deployments, and retrospective exposure surveillance post-deployment. This report also considers some opportunities for technological and operational advancements in technology for more effective exposure surveillance and effects management options for force deployments in future years. |
| 3 lines of defence risk management: Pain Management and the Opioid Epidemic National Academies of Sciences, Engineering, and Medicine, Health and Medicine Division, Board on Health Sciences Policy, Committee on Pain Management and Regulatory Strategies to Address Prescription Opioid Abuse, 2017-09-28 Drug overdose, driven largely by overdose related to the use of opioids, is now the leading cause of unintentional injury death in the United States. The ongoing opioid crisis lies at the intersection of two public health challenges: reducing the burden of suffering from pain and containing the rising toll of the harms that can arise from the use of opioid medications. Chronic pain and opioid use disorder both represent complex human conditions affecting millions of Americans and causing untold disability and loss of function. In the context of the growing opioid problem, the U.S. Food and Drug Administration (FDA) launched an Opioids Action Plan in early 2016. As part of this plan, the FDA asked the National Academies of Sciences, Engineering, and Medicine to convene a committee to update the state of the science on pain research, care, and education and to identify actions the FDA and others can take to respond to the opioid epidemic, with a particular focus on informing FDA's development of a formal method for incorporating individual and societal considerations into its risk-benefit framework for opioid approval and monitoring. |
| 3 lines of defence risk management: Fundamentals of Risk Management Paul Hopkin, 2017-01-03 Fundamentals of Risk Management, now in its fourth edition, is a comprehensive introduction to commercial and business risk for students and a broad range of risk professionals. Providing extensive coverage of the core frameworks of business continuity planning, enterprise risk management and project risk management, this is the definitive guide to dealing with the different types of risk an organization faces. With relevant international case examples from both the private and public sectors, this revised edition of Fundamentals of Risk Management is completely aligned to ISO 31000 and provides a full analysis of changes in contemporary risk areas including supply chain, cyber risk, risk culture and improvements in risk management documentation and statutory risk reporting. This new edition of Fundamentals of Risk Management has been fully updated to reflect the development of risk management standards and practice, in particular business continuity standards, regulatory developments, risks to reputation and the business model, changes in enterprise risk management (ERM), loss control and the value of insurance as a risk management method. Also including a thorough overview of the international risk management standards and frameworks, strategy and policy, this book is the definitive professional text for risk managers. |
| 3 lines of defence risk management: The Effective CISSP: Security and Risk Management Wentz Wu, 2020-04-27 Start with a Solid Foundation to Secure Your CISSP! The Effective CISSP: Security and Risk Management is for CISSP aspirants and those who are interested in information security or confused by cybersecurity buzzwords and jargon. It is a supplement, not a replacement, to the CISSP study guides that CISSP aspirants have used as their primary source. It introduces core concepts, not all topics, of Domain One in the CISSP CBK - Security and Risk Management. It helps CISSP aspirants build a conceptual security model or blueprint so that they can proceed to read other materials, learn confidently and with less frustration, and pass the CISSP exam accordingly. Moreover, this book is also beneficial for ISSMP, CISM, and other cybersecurity certifications. This book proposes an integral conceptual security model by integrating ISO 31000, NIST FARM Risk Framework, and PMI Organizational Project Management (OPM) Framework to provide a holistic view for CISSP aspirants. It introduces two overarching models as the guidance for the first CISSP Domain: Wentz's Risk and Governance Model. Wentz's Risk Model is based on the concept of neutral risk and integrates the Peacock Model, the Onion Model, and the Protection Ring Model derived from the NIST Generic Risk Model. Wentz's Governance Model is derived from the integral discipline of governance, risk management, and compliance. There are six chapters in this book organized structurally and sequenced logically. If you are new to CISSP, read them in sequence; if you are eager to learn anything and have a bird view from one thousand feet high, the author highly suggests keeping an eye on Chapter 2 Security and Risk Management. This book, as both a tutorial and reference, deserves space on your bookshelf. |
| 3 lines of defence risk management: Fundamentals of Risk Management Paul Hopkin, Institute of Risk Management, 2012-05-03 Now more than ever, organizations must plan, response and recognize all forms of risks that they face. Fundamentals of Risk Management, now in its second edition, provides a comprehensive introduction to the subject of commercial and business risk for anyone studying for a career in risk as well as a broad range of risk professionals. It examines the key components of risk management and its application with examples to demonstrate its benefit to organisations in the public and private sector. The second edition has been completely updated to take into account the greater influence of ISO 3100, the emergence of Governance Risk and Compliance (GRC) and the wide use of the bowtie method to illustrate risk management. In addition, there is now a chapter on the skills and competencies required by an effective risk manager. |
| 3 lines of defence risk management: Rational Cybersecurity for Business Dan Blum, 2020-06-27 Use the guidance in this comprehensive field guide to gain the support of your top executives for aligning a rational cybersecurity plan with your business. You will learn how to improve working relationships with stakeholders in complex digital businesses, IT, and development environments. You will know how to prioritize your security program, and motivate and retain your team. Misalignment between security and your business can start at the top at the C-suite or happen at the line of business, IT, development, or user level. It has a corrosive effect on any security project it touches. But it does not have to be like this. Author Dan Blum presents valuable lessons learned from interviews with over 70 security and business leaders. You will discover how to successfully solve issues related to: risk management, operational security, privacy protection, hybrid cloud management, security culture and user awareness, and communication challenges. This book presents six priority areas to focus on to maximize the effectiveness of your cybersecurity program: risk management, control baseline, security culture, IT rationalization, access control, and cyber-resilience. Common challenges and good practices are provided for businesses of different types and sizes. And more than 50 specific keys to alignment are included. What You Will Learn Improve your security culture: clarify security-related roles, communicate effectively to businesspeople, and hire, motivate, or retain outstanding security staff by creating a sense of efficacy Develop a consistent accountability model, information risk taxonomy, and risk management framework Adopt a security and risk governance model consistent with your business structure or culture, manage policy, and optimize security budgeting within the larger business unit and CIO organization IT spend Tailor a control baseline to your organization’s maturity level, regulatory requirements, scale, circumstances, and critical assets Help CIOs, Chief Digital Officers, and other executives to develop an IT strategy for curating cloud solutions and reducing shadow IT, building up DevSecOps and Disciplined Agile, and more Balance access control and accountability approaches, leverage modern digital identity standards to improve digital relationships, and provide data governance and privacy-enhancing capabilities Plan for cyber-resilience: work with the SOC, IT, business groups, and external sources to coordinate incident response and to recover from outages and come back stronger Integrate your learnings from this book into a quick-hitting rational cybersecurity success plan Who This Book Is For Chief Information Security Officers (CISOs) and other heads of security, security directors and managers, security architects and project leads, and other team members providing security leadership to your business |
| 3 lines of defence risk management: Public Sector Risk Management Martin Fone, Peter C. Young, 2000-01-01 The management of risk is a fundamental purpose of government. Whether risks arise from the physical environment, the economic environment, or even from changes in voter preferences, public institutions have a broad responsibility to assess and address the risks that impact the community they serve and their organisation. Public bodies are operating in a dynamic environment. The imposition of a Best Value regime is forcing them not only to perform more efficiently, effectively and responsively but also to develop best practices and benchmarking criteria to demonstrate their performance. At the same time, the ever-increasing delegation of responsibilities from central government and the European Union has widened their exposure to risk. Public institutions are now encouraged to partner with the private sector and outsource some of their traditionally retained services, generating agency and delegation exposures. In such an environment, controlling the cost of risk has become a real priority. But risk management is not just about preventing losses and reducing costs. Increasingly, risk management is defined as the co-ordinated management of all risks. This definition serves to encompass risk-taking where it serves to meet overall organisational objectives. This broader view of risk management, known as 'organisation risk management,' asserts that risk management is a general management function that permeates an organisation, is linked to the organisation's overall strategic plan, and serves to enable the operational achievement of organisational goals and objectives. Under this frame of reference, risk management is not something a risk management department practices on a public body; but rather an organisational value that informs and supports all managers' and employees' duties and activities. Risk management is a central purpose of public institutions. 'Public Sector Risk Management' addresses the major challenges facing public bodies today and provides the basic tools necessary for implementing a risk management programme. It introduces the subject of risk management through the development of a framework known as 'Organisation Risk Management' (ORM), which establishes the premise of risk management as an organisation-wide endeavour. Readers will learn of the governing concepts and principles of ORM in the public sector, but will also see how those concepts and principles translate into practice. Various ready-to-use tools and techniques are provided, which will enable readers to translate information into immediate use within their organisations. 'Public Sector Risk Management' is ideal for practising risk managers, senior managers, and elected members desiring an accessible, but thorough, introduction to the subject . Provides a comprehensive framework for the management of Public Sector Risk Management Endorsed by The Institute of Risk Management (IRM) and by The Association of Local Authority Risk Managers (ALARM) on their public risk management programs |
| 3 lines of defence risk management: Risk Management at Board Level Vinay Kalia, Roland Müller, 2019-01-14 Risk Management today has moved from being the topic of top level conferences and media discussions to being a permanent issue in the board and top management agenda. Several new directives and regulations in Switzerland, Germany and EU make it obligatory for the firms to have a risk management strategy and transparently disclose the risk management process to their stakeholders. Shareholders, insurance providers, banks, media, analysts, employees, suppliers and other stakeholders expect the board members to be pro-active in knowing the critical risks facing their organization and provide them with a reasonable assurance vis-à-vis the management of those risks. In this environment however, the lack of standards and training opportunities makes this task difficult for board members. This book with the help of real life examples, analysis of drivers, interpretation of the Swiss legal requirements, and information based on international benchmarks tries to reach out to the forward looking leaders of today's businesses. The authors have collectively brought their years of scientific and practical experience in risk management, Swiss law and board memberships together to provide the board members practical solutions in risk management. The desire is that this book will clear the fear regarding risk management from the minds of the company leadership and help them in making risk savvy decisions in quest to achieve their strategic objectives. |
| 3 lines of defence risk management: Detecting Red Flags in Board Reports Office of the Comptroller of the Currency, 2014-10-19 Good decisions begin with good information. A bank's board of directors needs concise, accurate, and timely reports to help it perform its fiduciary responsibilities. This booklet describes information generally found in board reports, and it highlights “red flags”—ratios or trends that may signal existing or potential problems. An effective board is alert for the appearance of red flags that give rise to further inquiry. By making further inquiry, the directors can determine if a substantial problem exists or may be forming. |
| 3 lines of defence risk management: Information is Beautiful David McCandless, 2009 Miscellaneous facts and ideas are interconnected and represented in a visual format, a visual miscellaneum, which represents a series of experiments in making information approachable and beautiful -- from p.007 |
| 3 lines of defence risk management: Risk Management and Corporate Governance Organization for Economic Cooperation and Development, 2014 This sixth peer review of the OECD Principles of Corporate Governance analyses the corporate governance framework and practices relating to corporate risk management, in the private sector and in state-owned enterprises. The review covers 26 jurisdictions and is based on a general survey of all participating jurisdictions in December 2012, as well as an in-depth review of corporate risk management in Norway, Singapore and Switzerland. The report finds that while risk-taking is a fundamental driving force in business and entrepreneurship, the cost of risk management failures is often underestimated, both externally and internally, including the cost in terms of management time needed to rectify the situation. The reports thus concludes that corporate governance should ensure that risks are understood, managed, and, when appropriate, communicated. |
| 3 lines of defence risk management: Defence Management Hari Bucur-Marcu, Philipp Fluri, Todor Tagarev, 2009 his first volume in the Security and Defence Management Series focuses on practical aspects of democratic defence management through the eyes of practioners. Outlining in simple terms the key issues defence professionals must address to ensure good governance of the defence sector from within the defence establishment, the book provides an introduction to these issues for new defence professionals in transition democracies. |
| 3 lines of defence risk management: The Complete Guide to Business Risk Management Kit Sadgrove, 2016-03-03 Risk management and contingency planning has really come to the fore since the first edition of this book was originally published. Computer failure, fire, fraud, robbery, accident, environmental damage, new regulations - business is constantly under threat. But how do you determine which are the most important dangers for your business? What can you do to lessen the chances of their happening - and minimize the impact if they do happen? In this comprehensive volume Kit Sadgrove shows how you can identify - and control - the relevant threats and ensure that your company will survive. He begins by asking 'What is risk?', 'How do we assess it?' and 'How can it be managed?' He goes on to examine in detail the key danger areas including finance, product quality, health and safety, security and the environment. With case studies, self-assessment exercises and checklists, each chapter looks systematically at what is involved and enables you to draw up action plans that could, for example, provide a defence in law or reduce your insurance premium. The new edition reflects the changes in the global environment, the new risks that have emerged and the effect of macroeconomic factors on business profitability and success. The author has also included a set of case studies to illustrate his ideas in practice. |
| 3 lines of defence risk management: IT Control Objectives for Basel II IT Governance Institute, 2007 |
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3、点击：开始——字体——带圈字符。 4、在弹出的对话框中选择圈号“ ”，由于数字占空间较大，要选择“增大号圈”，然后点击“确 …
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