Protecting Value – Benefits of having a combined assurance model
As a Board of Directors member, you rely on the information management gives you to make key decisions.
With increasing requirements and responsibilities being put on Boards locally including personal liabilities, where can board members get assurance on corporate governance within organisations? Corporate governance is not a person or department but rather different cogs of the wheel working in sync to provide assurance.
King III defines combined assurance as “Integrating, coordinating, and aligning the risk management and assurance processes within an organisation to optimise and maximise the level of risk, governance, and control oversight over the organisation’s risk landscape.”
In most companies, key role players are business management, risk management, compliance, internal audit, and company secretary. This is what is also known as the three lines of defense.
• First line of defense: This is the head of the business unit who is accountable for its dayto- day operations including management of risk issues that may arise. This is normally the busines unit heads and product owners. • Second line of defense: Provides guidance, support, and oversight of risks within the business. This is normally the risk management structures and compliance department. • Third line of defense: Provides independent assurance. These normally include internal audit, external audit, and regulators. In addition to clear roles and responsibilities, governance committees are important to oversee governance activities and affirm confidence in the organisation’s operations. The governance committees need to be equipped with people with the right skills and knowledge to challenge management and support the business. Equally, assurance providers should be capable of creating and protecting value for all shareholders. * Lesego Bannalotlhe is First National Bank Chief Risk Officer