Expert Canvasses Three-Tier Defence Model for Business Risk Control
Covenant Faculty, staff and students in the Department of Accounting have been urged to have a comprehension of the business model that gives a clear definition of roles and responsibilities, so that each group of risk and control professionals understands the boundaries of their responsibilities and how their positions fit into the organisation’s overall risk and control structure.
The charge was given by a financial expert, Mr. Gbemisola Durowaiye, at a Town and Gown Seminar of the Accounting Department, where he delivered a lecture titled “Three Lines of Defence and Specialisation”. Mr. Durowaiye said all risk management tools were primarily designed to enhance the control environment for a successful and profitable business endeavour.
Mr. Durowaiye stated that the first line of defence was the operational management dimension, which was the dimension that owned and managed risks. It also identified, assessed, controlled, and mitigated risks, guiding the development and implementation of internal policies and procedures, and ensuring that activities were consistent with goals and objectives.
The Guest Speaker, a Fellow Chartered Accountant (FCA), posited that the second line of defence for any business was the risk management and compliance functions it provided. According to him, the second line of defence gave oversight, which provided helps in building and monitoring the first line-of-defence controls.
According to him, “Management establishes these functions to ensure that the first line of defence is properly designed, in place, and operating as intended”.
Mr. Durowaiye noted that the third line of defence was the internal audit function, which was geared towards providing independent assurances on the effectiveness of existing governance, risk management, and internal control systems.
He noted that the three lines of defence in every organisation was all about making every level of authority, from the Board of Directors to the internal and external auditing arm of organisations, accountable to established governance best practices around the world.
In addition, he posited that the three lines of defence availed upcoming accountants the opportunity to hone their skill and become specialised in any of the subsets of the checks that the various defensive mechanisms held. These included financial/management accounting, taxation, compliance management, risk management, internal auditing and forensics. He said all these specialised subsets had their various local and international certification programmes for signposting competency.
The Guest Speaker told the audience that there was a talent war going on out there, which required upstarts to work at positioning themselves out there as the required talent for organisations. According to him, it took a potpourri of purpose, vision, strategy and discipline to emerge exceptional at adding value and impact on an organisation.
He concluded by reiterating the essence of the profession of accounting as being about producing time-tested and professionally competent world-class accountants with the best of integrity.