General Knowledge · Banking Governance and Risk Management
In the 'Three Lines of Defense' framework for risk management and internal control in a bank, how is the compliance function categorized?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The first line of defense, as it manages risks directly through customer-facing activities
- 2The second line of defense, as it provides oversight and monitors the implementation of effective risk management practices✓
- 3The third line of defense, as it provides independent assurance to the board on the effectiveness of internal controls
- 4The fourth line of defense, consisting of external regulatory bodies and statutory auditors
Correct answer
The second line of defense, as it provides oversight and monitors the implementation of effective risk management practices
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