3LoD: Moving To A Risk-Based Approach
The three lines of defense (3LoD) model was introduced to provide a framework that will help organizations in ensuring better biometrics risk management.
Identifying the 3LoD
Generally, the 3LoD model includes three aspects. These are the following:
- First line of defense (1LoD): Risk Owners/Risk Takers
- Second line of defense (2LoD): Risk Oversight/Risk Guardians
- Third line of defense (3LoD): Risk Assurance
These three groups have to work together by splitting the responsibility based on their functions. In doing this, it is important to clearly define the responsibilities, roles, and levels of accountability of each.
Clarity is among the most important things the 3LoD framework has to offer. It makes risk management easy to understand and communicate. With this, organizations can better determine ambiguities, gaps, overlaps, and weaknesses that could affect risk management activities.
In applying the concept behind the 3LoD model, many organizations have gone to siloed and people-centric approaches. While that can be beneficial, organizations that want to stimulate innovation and further remove friction may need to approach this framework differently.
That is where a risk activity-based model can come into play with biometrics.
Shifting to a Risk-Based Approach
A risk activity-based model requires organizations to review risk activities instead of functions.
Typically, organizations use business functions as their guide in defining the 1LoD and 2LoD. They decide based on the key activities. These are sorted into two groups — risk-taking and risk monitoring.
However, this type of approach may overlook certain things, such as when the activities that fall under the 1LoD occur in non-traditional areas. Therefore, resulting in a lacking 3LoD.
Proper application of a risk activity-based 3LoD model offers many benefits. These include:
- improvement of risk coverage across the 3LoD framework
- increase in confidence that key risks are addressed effectively
- assurance that emerging governance, risk, and control matters meet regulatory expectations
- stable, sustainable, and flexible 3LoD model
- greater efficiency
Reducing Friction
Risk management is only one of the many aspects that organizations have to focus on. Another crucial factor is security, which is especially vital when there are finances and client information involved.
That said, some organizations find it hard to offer security without friction. Fortunately, there are ways to ensure better security while reducing friction. One of these is through the adoption of features like biometrics.
With the right provider, the use of biometrics can lead to more advantages for organizations. For instance, with Nok Nok Products, there is a 50% reduction in onboarding time. Thus, making the experience for the customer more pleasant. It, in turn, can help in promoting customer loyalty.
