When risks are increasingly interconnected, rapidly evolving, and often vague, fragmented approaches to risk management aren’t sustainable. Organizations are facing rising pressure – from regulators, boards, and the broader market – to not just demonstrate control but to inspire confidence. That confidence stems from alignment across people, processes, systems, and, most critically, the lines of defense.
Evolving Risk Frameworks Toward Integration
The IIA’s “Three Lines Model” reimagines how organizations define and coordinate risk and control responsibilities. It moves beyond the rigid hierarchy of the traditional “three lines of defense” and promotes collaboration, integration, and a shared vision of performance and assurance. Similarly, the COSO ERM Framework underscores the importance of embedding risk into strategy, decision-making, and culture – an approach that relies on coordinated, enterprise-wide engagement.
Despite the clarity offered by these frameworks, many organizations continue to operate in silos. Roles are defined but not connected. Efforts are made in parallel, not in partnership. As a result, critical risks fall through the cracks or are assessed three times over.
Understanding the Lines: Roles and Risks
To better understand the disconnect, consider the distinct but complementary roles of each line of defense:
First Line: Business and Operations
- Owns and manages risk as part of daily activities.
- Designs and executes controls embedded in processes.
- Focuses on achieving objectives while maintaining compliance.
- Challenge when isolated: Lacks visibility into enterprise-wide risk priorities and may undervalue broader governance needs.
Second Line: Risk Management and Compliance
- Develops policies, frameworks, and risk methodologies.
- Provides oversight and guidance to the first line.
- Monitors emerging risks, regulatory changes, and control effectiveness.
- Challenge when siloed: Viewed as enforcement rather than enablement; may duplicate efforts or misalign with operational realities.
Third Line: Internal Audit
- Provides independent, objective assurance to executive leadership and the board.
- Leverages risk and compliance data to inform a dynamic, risk-based plan.
- Assesses the effectiveness of governance, risk management, and control processes.
- Reports directly to the board or audit committee.
- Challenge when disconnected: May operate in hindsight, be seen as a policing function rather than a strategic partner, and react to risks that could have been addressed through earlier engagement.
Each line plays a vital role. But when their work isn’t aligned – when responsibilities aren’t rationalized, or insights aren’t shared – the organization loses the opportunity to leverage risk oversight as a strategic capability.
Enabling Alignment: From Theory to Practice
What does alignment look like in practice?
- Establishing shared objectives across risk, compliance, and audit functions.
- Defining a unified risk taxonomy to ensure consistent language and categorization.
- Coordinating planning and reporting across the three lines for efficiency and clarity.
- Leveraging integrated GRC technology to provide a real-time, enterprise-wide view of risk.
Integrated risk management (IRM) frameworks and modern GRC technologies provide a single source of truth, enabling real-time insights and driving efficiency across assurance functions.
Forward-thinking organizations are embedding risk monitoring into frontline systems, implementing integrated planning cycles, and leveraging GRC platforms to enhance visibility across the enterprise. Internal audit is also evolving – acting as both evaluator and facilitator – convening stakeholders to close assurance gaps and ensure resources are deployed where they matter most.
As an example, internal audit is stepping into a more strategic, collaborative role, leaning into risk management or compliance advisory when needed, while maintaining its independence and adding strategic value. This may include:
- Rationalizing control frameworks.
- Counseling on policy effectiveness.
- Facilitating risk workshops to align stakeholders.
- Advising on governance around new processes or system implementations.
The benefits go far beyond compliance. Aligned assurance empowers agile responses to disruption, supports smarter decisions, and builds greater trust with boards and stakeholders. As oversight expands into areas like cybersecurity, ESG, and third-party risk, those organizations that can tell a unified, data-informed risk story will differentiate themselves.
Leading with Confidence Through Alignment
To unlock true value from assurance functions, leadership must embrace an integrated mindset – fostering cross-functional coordination, enabling tools, and a culture of shared accountability. Risk shouldn’t be managed in isolation but embedded in how the organization operates and grows. When the lines of defense are aligned and supported by smart GRC solutions, organizations move beyond compliance to build resilience, enable smarter decisions, and lead with greater confidence.
To maximize the full value of a three lines model, contact CrossCountry Consulting.