How does the "three lines of defense" model contribute to risk management?

The "three lines of defense" model is a crucial framework in risk management that delineates a structured approach to managing risks within an organization. The correct choice highlights its primary function: outlining responsibilities across three distinct levels.

In this model, the first line of defense consists of operational management, who are responsible for managing risks directly as part of their daily activities. They are the ones who understand the risks associated with their operations and are in the best position to assess and mitigate those risks on an ongoing basis.

The second line of defense includes the risk management and compliance functions. This level is responsible for developing policies and procedures, monitoring risk exposures, and providing guidance to the first line. This ensures that there is a framework for effectively managing risks and that risk management practices are aligned with the organization's goals.

The third line comprises independent assurance, typically an internal audit function. This level is tasked with evaluating the effectiveness of governance, risk management, and internal control processes, providing an objective view of how well risk management is functioning across the organization.

This clearly defined distribution of responsibilities enhances accountability and ensures a comprehensive approach to risk management, allowing organizations to better identify, assess, and respond to risks in a coordinated manner.

The other choices do not encapsulate the model's