As recently as 10 years ago, enterprise risk management (ERM) was still in its formative stage. As recently as 10 years ago, enterprise risk management (ERM) was still in its formative stage. (iStock)

Any discussion about organizing and governing risk management in a financial services company typically includes the "three lines of defense" model.

There are different interpretations of the three lines' roles and which functional departments fit into each line, which are broadly defined as follows:

  1. First line: Those that own and manage risk
  2. Second line: Those that oversee risk
  3. Third line: Independent assurance

What also differs is how successful this model has been over the last 15 years.

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