Adopt the Three Lines of Defense
In addition to the tactical changes that banks will need to make regarding the frequency of compliance activities, the adoption of the 3 Lines of Defense of Risk Management may also serve as an adjustment that is needed.
At our customer conference IMPACT 2023, LogicManager customer Patrick Edwards discussed this concept, sharing “The three lines of defense represent an approach to providing structure around risk management, and the internal controls within an organization by defining those roles and responsibilities in different areas and then the relationship between those two those different areas. In the three lines of defense model, management control is the first line of defense and risk management. The various risk control and compliance oversight functions established by management are the second line, and independent assurance is the third.”
How LogicManager Empowers Banks
LogicManager’s Enterprise Risk Management (ERM) solutions are invaluable in assisting banks to implement the Three Lines of Defense model effectively. Here’s a concise breakdown of how LogicManager can make a difference:
- Risk Assessment and Management: LogicManager’s software provides a comprehensive platform for banks to identify, assess, and manage risks across their operations. The first line of defense, typically the business units, can use the software to conduct risk assessments, document risks, and develop mitigation plans. This ensures that the risks at the operational level are well understood and addressed.
- Policy and Procedure Management: The second line of defense, which includes risk management and compliance functions, can use LogicManager to establish and manage policies, standards, and procedures related to risk and compliance. The software allows for the centralization and distribution of these documents, ensuring that they are accessible and up-to-date.
- Internal Audit and Assurance: For the third line of defense, LogicManager can be used to facilitate internal audit processes. Internal auditors can use the platform to plan and execute audits, track findings, and report on the effectiveness of the risk management and control activities in place.
- Expert Risk Advisory: LogicManager’s expert advisors can provide guidance and expertise in implementing the Three Lines of Defense model. Their advisors can work closely with the bank to tailor the software and processes to its specific requirements.
In partnership with LogicManager, banks can bolster their risk management, enhancing governance and compliance while mitigating potential issues. Schedule a meeting with one LogicManager’s risk experts today to learn how you can keep ahead of new regulations.