One of the areas covered in our Three Lines of Defence (3LOD) Practice Benchmark is how financial firms can further embed the 3LOD model.
Here’s a quick overview of the four key ways we identified.
4 opportunities to further embed the 3LOD model in your firm
Document risk management roles and cultural aspirations at both an organisational and role level. These documents need to describe and enable an understanding of what values and beliefs are driving the right risk management behaviours.
2. Individual accountability and incentives
Individuals within an organisation must be held accountable and incentivised through formal processes. They must also demonstrate informal behaviours that reinforce the required risk management culture.
3. Culture and communication
Communicate operational risk management culture clearly and transparently. This ensures that the business understands and echoes the tone from the top.
4. Active risk management
To support active risk management, the second line needs to be an engaged, networked and influential part of the business. The second line should drive collaboration and influence human behaviour. It must also invest in and use advanced technology to improve effectiveness.
See how you can improve the 3LOD model at your firm
ORX Practice Benchmarks help financial organisations compare and improve practice in key areas of operational and non-financial risk management. They consist of a report detailing industry trends and an individual benchmark showing how your firm’s practice compares.
Our Three Lines of Defence Practice Benchmark covers key areas, such as:
- Benefits of the 3LOD model
- Challenges of the 3LOD model
- Embedding the 3LOD model
- Adapting the 3LOD model for your organisation
- Roles and responsibilities
It also explores how the model is viewed across the different lines (first, second, third and line 1.5).