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CMA Final · Strategic Performance Management and Business Valuation · Risk Management

Under the three lines model of risk governance, which activity is characteristically performed by the third line?

The third line provides independent assurance, typically through internal audit reporting to the board on how effective risk management and controls are. Day-to-day ownership belongs to the first line, while policy setting and monitoring belong to the second line.

  1. AIndependent internal audit assurance to the board on the effectiveness of risk management and controlsCorrect
  2. BDay-to-day ownership and management of risks by operating managers
  3. CSetting risk policies and monitoring by the risk management function
  4. DExecution of control procedures within business processes

Explanation

The first line owns and manages risk, the second line provides oversight, policies and monitoring, and the third line is internal audit giving independent assurance. Option about risk policies describes the second line, so it is wrong.

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