Topic: The Way Forward: All “LINES” Focused on Identifying/Managing/Assessing/Reporting On Certainty of Achieving Key Objectives
The IIA released a radical replacement to the 2003 THREE LINES OF DEFENSE MODEL in July 2020. The word “DEFENSE” is gone. It is now simply the THREE LINES MODEL. Most importantly, all lines are to focus on identifying, assessing, managing and reporting on CERTAINTY OF ACHIEVEMENT of strategy/value creation objectives as well as the more traditional value preservation objectives. Combined with the objective centric COSO ERM 2017 framework guidance, momentum is building to move to an approach where all the players focus on assessing whether the CERTAINTY OF ACHIEVING top objectives is acceptable. If regulators globally get on board, momentum will accelerate exponentially.
While a small number of organizations have moved to an objective centric approach where all LINES focus on clear end result objectives that include value creation/strategic objectives, as well as traditional value preservation objectives, most have not. The majority of risk functions globally have used RISK REGISTERS, not OBJECTIVES REGISTERS, as the foundation for their work. Internal audit functions have similarly applied RISK BASED IA methods to decide what to audit and report on. Senior management has not reported formally to boards on risk/certainty linked to top value creation and preservation objectives in the majority of organizations. Major changes are required.
This session will provide participants:
1. An overview of growing calls to rationalize the efforts of all the LINES by focusing on assessing whether the current certainty to achieving key objectives is acceptable/sufficient.
2. Step-by-step guidance on how to move from traditional RM and IA methods to OBJECTIVE CENTRIC RISK AND CERTAINTY MANAGEMENT (OCRCM), including selling the need for change to senior management and boards.
3. An understanding of the key barriers/risks to successful implementation of OCRCM and how to overcome them.
4. The role and importance of objective centric software as an enabler.
Presenter: Tim J. Leech FCPA CIA CCSA CRMA is Managing Director at Risk Oversight Solutions Inc.