Which line provides final approval for frameworks and ensures alignment with strategic objectives?

Which line provides final approval for frameworks and ensures alignment with strategic objectives?

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

Answer: (D)

Final approval for risk management frameworks and ensuring they align with strategic objectives rests with the Board of Directors. This governance body sets risk appetite, approves the overarching frameworks, and ensures that risk considerations are integrated into strategy and decision-making. The First Line of Defense consists of operational managers who own and manage risks and implement controls. The Second Line of Defense includes risk management and compliance functions that develop policies, monitor risk, and provide challenge to the first line. The Third Line of Defense is internal audit, offering independent assurance on the effectiveness of governance, risk management, and controls, while reporting to the Board but not delivering the final approval.

Final approval for risk management frameworks and ensuring they align with strategic objectives rests with the Board of Directors. This governance body sets risk appetite, approves the overarching frameworks, and ensures that risk considerations are integrated into strategy and decision-making. The First Line of Defense consists of operational managers who own and manage risks and implement controls. The Second Line of Defense includes risk management and compliance functions that develop policies, monitor risk, and provide challenge to the first line. The Third Line of Defense is internal audit, offering independent assurance on the effectiveness of governance, risk management, and controls, while reporting to the Board but not delivering the final approval.