Risk e-Views Vol 42 June 2014 – Risk Leadership: Does 3LOD Help or Hinder our Mission?

My view of the role of the risk profession differs to those who designed and promote the Three Lines of Defence (3LOD) model (at least how it has been interpreted by some).  As with my musings on whether there should be separate risk and audit committees for Boards, (see Blog, 22/11/09 “Should Audit and Risk Committees be Separate?” and Risk e-Views – Risk Leadership: Should a Board have a Risk Committee? 22/09/12) I feel risk professionals in organisations need to be advisors and confidants of the business and leave assurance to the audit profession. Whereas the 3LOD model promotes risk as an overseer, a challenger of business decisions and an assurer of good business decision-making, I see risk as an enabler.

The truth is, business people make decisions.  They invite into their decision chamber those people they trust to help them consider the options and make a decision.  (Do you remember Maxwell Smart’s love of the “Cone of Silence”?) If risk is positioned as the challenger of business decisions, the business decision-maker will be tempted to “game” the information they provide to the challenger, providing biased and limited information with the aim to steam-roll the risk advisor into approving the decision. 

What we want is the risk professional to be seen as trusted advisor and the first person invited to the table to consider the tough decisions.

As always I can help, please call me on  +61 2 9400 9702.

Please join my LinkedIn Group “Risk Leadership” here where you will find this article posted as a discussion for comment.