Risk management is a fast-growing, broad-ranging discipline that is spreading to organisations of every size and industry. It draws experts from a wide variety of backgrounds, from mathematical modelling and software engineering to accounting, insurance and law, and put simply, is the art of keeping your organisation out of trouble.
As organisations begin to implement risk management practices, they increasingly find themselves opening Pandora’s box.
At the centre of any risk management analysis are a network of analysts, auditors, managers and specialists, all providing vast amounts of information regarding the risks the organisation faces, not to mention how those risks are to be managed and mitigated.
The challenge that lies within the organisation is to then effectively leverage this wealth of risk management information. Who will coordinate tasks and responsibilities? Who will ensure the flow of information between stakeholders? Who will communicate an understanding of risk management to the risk owners on the front line of the organisation?
Implementing a ‘three line’ approach in your organisation is your best defence against risk.
An effective approach for delineating roles and responsibilities, taking a ‘three line’ approach positions front line employees and the management team as the ‘first line’ of defence, the board of directors (who oversee the risk management program) as the ‘second line’ of defence, and those who independently audit and verify risks within the organisation as the ‘third line’.
For any risk management program to succeed in an organisation, the support and engagement of operational staff and management as the ‘first line’ of defence is crucial. This requires risk management tools that support staff in taking ownership and embracing accountability for risk decisions.
The ‘second line’ of defence involves a risk-management committee or similar team that is directly accountable for overseeing the organisation’s risk management program. This responsibility is usually adopted at board level to support the management team and provide a structure for reporting.
The ‘third line’ of defence? Independent verification from a third party that you are meeting compliance requirements and following best practice.
How can we help? iPRO offers an intelligent, transparent, real-time solution for compliance monitoring, verification and risk management. iPRO assists organisations in defining best practices for contractor management and identifying gaps in their current risk management.
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