Why implement a LOD model?
Maximizing value from your lines of defense
The Lines of Defense (LOD) model has been cited extensively as an effective model to use for risk management.
The current economic environment and significant risk events over the last few years have caused companies to have a renewed focus on the effectiveness of risk management. Substantial amounts have been spent on risk management activities and reorganizing companies to best manage risk in line with various frameworks and models.
However, many companies now feel overwhelmed with the amount of risk management activity and have failed to reap the benefits of their investment in risk management. A logical and coordinated approach to risk management is integral to success.
Companies that do not have an established or well-coordinated LOD operating model are likely to experience one or more of the following challenges:
- Difficulty with effective risk oversight due to complex and inconsistent reporting
- Gaps in risk coverage
- Siloed risk functions, which reduces value and increases cost
- Business fatigue
- Layers of redundant controls