Question

In the financial services sector, some organizations have implemented a three-lines-of defense model. What does the use of this model suggest about an organization’s structure?

Answer 1

Answer:

The correct answer is: This organization uses a layered approach that creates a separation of duties.

Explanation:

The Three Lines of Defense model is an approach used to divide the duties of the financial department of an organization aiming to improve risk management and control. The first line of defense involves management and control measures. The second line includes financial control, security, quality, inspection, and compliance. The first and second lines of defense are in charge of senior managers of the entity.

The third line of defense involves the internal audits of the company and is in charge of the Board of Directors (BoD).