What is the purpose of the third line of defense?

Conditions

• Requires objectivity relative to the first and second lines.
• Covers both assurance over line effectiveness and evaluation of the risk management program.

Reasoning, step by step

1. Identify the third line as the audit function.
2. Understand that it includes internal and external auditors.
3. Recognize their job is to objectively ensure the first and second lines are effective.
4. Note that they also review and evaluate the risk management program.

Example

The presenter says: "And the third line includes internal and external auditors who objectively ensure the first and second lines of defense are effective, and also review and evaluate the risk management program."

Common misconceptions

• Thinking the third line implements the risk management program.
• Assuming the third line is responsible for daily operational risk ownership.

Watch the explanation

Explore next

• Where do external auditors fit in the Three Lines Model diagram?
• What responsibilities does the governing body have in the Three Lines Model?