Sapa Conference Day 1 - Third Line Of Defense

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Markg23
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Quizzes Created: 10 | Total Attempts: 2,783
Questions: 5 | Attempts: 125

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Defense Quizzes & Trivia

Questions and Answers
  • 1. 

    The three lines of defense model distinguishes among three groups (or lines) as follows:
    1. Functions that own and manage risks
    2. Functions that oversee risks
    3. Functions that provide independent assurance
    4. Functions that provide risk mitigation services
    5. Functions that deliver risks

    • A.

      I, II and IV

    • B.

      I, II and III

    • C.

      I, IV, and V

    • D.

      I, III, IV

    Correct Answer
    B. I, II and III
    Explanation
    The correct answer is I, II and III. The three lines of defense model distinguishes among three groups. The first line of defense is functions that own and manage risks. They are responsible for identifying, assessing, and managing risks within their area of responsibility. The second line of defense is functions that oversee risks. They provide guidance, support, and monitoring to ensure that risks are effectively managed. The third line of defense is functions that provide independent assurance. They conduct audits and reviews to assess the effectiveness of risk management processes and controls.

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  • 2. 

    Who owns the risks?

    • A.

      The auditors

    • B.

      Operational Management

    • C.

      The compliance department

    • D.

      The enterprise risk management department

    Correct Answer
    B. Operational Management
    Explanation
    Operational Management owns the risks because they are responsible for identifying, assessing, and managing risks within the organization's day-to-day operations. They have the knowledge and expertise to understand the specific risks associated with their department or area of responsibility and are accountable for implementing measures to mitigate those risks. The auditors, compliance department, and enterprise risk management department may also play a role in risk management, but ultimately it is operational management that has the primary responsibility for owning and managing risks.

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  • 3. 

    Why is there a need for a second line of defense?

    • A.

      Because in the real world, a single line of defense is inadequate

    • B.

      To monitor the first line-of-defense control

    • C.

      To ensure that the first line of defense is properly designed, in place and operating as intended

    • D.

      All of the above

    Correct Answer
    D. All of the above
    Explanation
    In the real world, relying on a single line of defense is not sufficient to protect against potential threats and risks. Having a second line of defense allows for additional monitoring and oversight of the first line-of-defense control. This helps to ensure that the initial control is properly designed, implemented, and functioning as intended. Therefore, all of the given options highlight the need for a second line of defense.

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  • 4. 

    The responsibilities of the risk management and compliance functions are all of the following, EXCEPT:

    • A.

      Providing risk management frameworks

    • B.

      Providing the governing body and senior management with comprehensive assurance

    • C.

      Monitoring the adequacy and effectiveness of internal controls.

    • D.

      Facilitating and monitoring implementation of effective risk management practices

    Correct Answer
    B. Providing the governing body and senior management with comprehensive assurance
    Explanation
    The responsibilities of the risk management and compliance functions include providing risk management frameworks, monitoring the adequacy and effectiveness of internal controls, and facilitating and monitoring implementation of effective risk management practices. However, providing the governing body and senior management with comprehensive assurance is not one of their responsibilities.

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  • 5. 

    Why is there a need for a third line of defense?

    • A.

      Because the first and second line are not to be trusted

    • B.

      To ensure that the auditors have a job in the organization

    • C.

      Because the high level of independence is not available in the second line of defense

    • D.

      To assist management in developing processes and controls to management risks

    Correct Answer
    C. Because the high level of independence is not available in the second line of defense
    Explanation
    The correct answer is because the high level of independence is not available in the second line of defense. The third line of defense is necessary to provide an objective and independent assessment of the effectiveness of the organization's risk management and control processes. While the first line of defense consists of operational management responsible for managing risks, and the second line of defense consists of risk and compliance functions providing oversight and support, they may not have the same level of independence as the third line. Therefore, the third line of defense is needed to ensure an unbiased evaluation of the organization's risk management practices.

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