CRMA Certification Practice Exam 2026 – Comprehensive All-in-One Resource to Master Risk Management Assurance!

The significance of the Three Lines of Defense model in risk management lies in its provision of a framework for accountability. This model delineates responsibilities within an organization, ensuring that different roles are clearly defined in relation to risk management.

In the first line of defense, operational management is responsible for identifying and managing risks as part of their everyday activities. The second line consists of risk management and compliance functions, which provide oversight and guidance to support the first line in managing risks more effectively. The third line is internal audit, which evaluates the effectiveness of risk management and controls across the organization.

By clearly outlining these roles, the Three Lines of Defense model fosters transparency, encourages a culture of risk awareness, and promotes accountability at all levels. This structured approach ensures that risk management is an integrated part of organizational governance rather than an isolated function, thus enhancing overall risk management effectiveness.

The other options do not accurately reflect the model's impact; it does not reduce employee numbers or solely focus on financial risks, nor does it eliminate risk-related decisions but rather emphasizes that informed decision-making around risks is essential.