Organisational structures for Enterprise and Operational Risk

Risk Management Model

The WFE study found that all the responding entities consistently use the three lines of defence model. This is entirely understandable, given the three lines of defence model is regarded by many within
Financial Services as best practice.

It could be argued that this is driven primarily by firms seeking to meet regulatory expectations rather than a reflection of the value and effectiveness of this model. Indeed, there are often many questions
about the value of this model as its practical implementation is not straight-forward.

One of the criticisms of the three lines of defence model is that rather than creating clarify, it creates confusion when implemented. Within the benchmarking paper, there is a hint that some exchanges and CCPs are experiencing this lack of clarity. There is mention of the fourth line of defence, and we suspect some of the participants would have implemented the concept of a 1.5 line of defence.

KRM22’s Global Risk Platform provides applications to help you address your firm’s regulatory, market, technology and operations risk challenges and to manage your entire enterprise risk profile. KRM22 is a public Group listed on AIM and headquartered in London, with offices in several of the world’s major financial centers.

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