Which line is described as maintaining the model inventory and setting standards for validation?

Which line is described as maintaining the model inventory and setting standards for validation?

• A. First Line of Defense
• B. Second Line of Defense
• C. Third Line of Defense
• D. Board of Directors

Answer: (A)

In the Three Lines of Defense framework, the line that owns and operates day-to-day processes is responsible for managing risk in actual operations. This line keeps the catalog of models in use up to date—the model inventory—and applies validation practices within the normal workflow, ensuring each model is documented, maintained, and used as intended. While another line provides overarching risk policy and sets organization-wide validation standards, the hands-on line is the one that maintains the inventory and enforces how validation is carried out in practice. For example, a lending unit that uses a credit-scoring model would maintain its own model catalog and run validation checks as part of daily operations, with risk management supplying the broader framework and standards across the organization.

In the Three Lines of Defense framework, the line that owns and operates day-to-day processes is responsible for managing risk in actual operations. This line keeps the catalog of models in use up to date—the model inventory—and applies validation practices within the normal workflow, ensuring each model is documented, maintained, and used as intended. While another line provides overarching risk policy and sets organization-wide validation standards, the hands-on line is the one that maintains the inventory and enforces how validation is carried out in practice. For example, a lending unit that uses a credit-scoring model would maintain its own model catalog and run validation checks as part of daily operations, with risk management supplying the broader framework and standards across the organization.