Combining forces: Embracing aligned assurance

Aligned assurance is a challenging and dynamic concept currently transforming risk management within financial institutions by proactively coordinating risk monitoring, reporting, and assurance processes across the three lines of defense (3LoD).

The primary goal is to create a more interconnected and comprehensive strategy for identifying and managing risks. Recognizing that risk management is a collective priority shared by the business, risk and compliance functions, and internal audit, aligned assurance seeks to fortify these lines of defense with the right people, processes, and technologies. It offers a compelling case for a more coordinated approach in the modern and complex risk landscape.

Aligned assurance enhances the 3LoD framework by promoting stronger coordination, clearer roles and responsibilities, reduced risk oversight gaps, and better resource allocation.

Additionally, it can elevate leadership confidence through improved reporting quality and consistency. As a result, financial institutions end up with stronger regulatory compliance oversight, a holistic approach to risk management, enhanced organizational communication, and improved customer trust.

However, breaking silos and achieving alignment can be challenging in the financial sector due to various barriers, including siloed teams, inadequate risk reporting processes and channels, unclear role definitions, and conflicting priorities.

Nevertheless, these obstacles can be overcome to enable aligned assurance's implementation.

Our risk management team at KPMG has outlined a four-pillar approach to help accelerate this transformation, emphasizing the need for an overarching risk management framework, collaboration across 3LoD, streamlined risk management activities, and strategic, intentional risk reporting. These pillars help financial institutions effectively integrate aligned assurance into their risk management practices, making them more resilient and responsive to evolving risks.