Was your 3 lines of defence (3LoD) model put under the test during your response to COVID-19?
We asked 10 Members this very question during a roundtable discussion about if and how 3LoD was maintained during the height of the pandemic.
The general consensus was that the 3LoD model is valuable and necessary for long-term sustainable governance.
But, during a crisis, do we relax the 3LoD and work under a ‘combined set of defences’?
This was certainly the case for many Members. And here are four ways they’ve adapted the 3LoD during the crisis.
1. Blur the 3 lines
Organisations continue to operate under the 3 lines of defence, however, to ensure maximum value, the 3 lines of defences were ‘blurred’.
2. Place extra firepower into the 1st line
To some extent, 2nd line functions operated as an extension to the 1st line. In some cases, expertise from the 2nd line were seconded to support the 1st line.
3. Pull in resources to support the 2nd line
3rd line functions were pulled into the 2nd line while also considering how internal audit maintain activities.
In crisis mode, the focus would be on ‘keeping the wheel turning’.
In this respect, the growth agenda stops, the assurance agenda stops, and functions triage to prevent ‘the bleeding’. In the recovery phase, 3rd line activity increases.
4. But don’t make unnecessary compromises
Standards were strictly adhered to so that controls were not compromised. This includes making greater use of technology to enable remote quality control assurances around critical functions.
For many, this was a temporary measure. Companies will transition back to their original 3LoD arrangements as they emerge out of crisis mode.
Of course, this is just a brief summary of the wider conversations that took place. And we will be hosting many more roundtables – on various topics – which bring together leading risk managers to collaboratively unpack particular issues.