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ACCA Strategic Professional · Strategic Business Leader · Managing, monitoring and mitigating risk

Zephyr Logistics Ltd has a board that wants a risk management approach in which the board sets risk appetite, management owns risks day to day, and an independent function provides assurance on how well the arrangements work. Which risk governance arrangement does this describe?

The arrangement is the three lines model. Management owns and controls risks, a risk and compliance function oversees them, and an independent function such as internal audit gives assurance, all under a board that sets appetite. The other options are strategy or organisation models, not risk governance frameworks.

  1. AThe three lines modelCorrect
  2. BThe Porter value chain
  3. CThe Ansoff growth matrix
  4. DThe McKinsey 7S framework

Explanation

The three lines model separates management ownership of risk (first and second lines) from independent assurance (internal audit, third line), with the board setting direction. The other options are strategy or organisational models and do not address risk governance roles.

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