What is the Three Lines of Defence (3LOD) model?
The Three Lines of Defence (3LOD) is a model that the Financial Services Authority (FSA), now the Financial Conduct Authority (FCA) encourages firms to adopt to provide clarity of responsibilities and accountabilities between ‘the three lines’ – the business, risk management, and internal audit – in order to ensure effective and independent oversight, and assurance that activities take place in line with key decisions and processes. Since its introduction, this model has been promoted by many regulatory bodies globally. It has become a de facto regulatory standard and is considered regulatory best practice.
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