(This is part three in a series on the three lines of defense in credit union risk management and compliance. You can read part one here and part two here.)

Recently, we released the latest version of our credit union audit management software, Redboard 10. To meet client needs, we expanded its functionality to better incorporate internal audit teams and business users. These changes have significantly expanded Redboard’s role in audits and examinations.

Compliance and risk management are necessary at credit unions. After all, you hold the keys to your members’ livelihoods, and a mistake on your part could have major financial consequences for them.

To better manage risk, audit teams often follow the three lines of defense. These lines of defense may differ slightly for each institution, but the basics are the same. In fact, you can learn more about what each of them entails here.

 

Redboard and the Three Lines of Defense

To briefly recap, the three lines of defense in risk management are these:

  • Management direction. The policies, processes, and procedures at a credit union are all designed to minimize risk and ensure safety.
  • Quality control and compliance. Checking to ensure that operational rules are followed is an important part of the three lines model.
  • Internal or external audits. Independent assurance that the first and second lines of defense are working effectively and as intended.

Redboard isn’t supposed to take the place of any of these lines of defense. However, it can help credit union audit teams efficiently execute the second and third lines, by automating quality control, compliance, audit, and exam activities.

How Redboard Helps Credit Unions

Redboard’s audit management software simplifies audits and examinations by improving the second and third lines of defense. Unfortunately, it can’t help with the first. Every credit union develops its own management direction!

To assist in the second line of defense, Redboard automates multiple processes around quality control and compliance activities. Examples of these activities include new account audits and information security audits. Introducing automation to standard processes and procedures ensures greater speed, consistency, and accuracy than humans could accomplish.

For the compliance team—the people in the credit union actually running the compliance projects—Redboard provides a centralized location for all documents and activity. They don’t have to use several different pieces of software (such as Outlook, Excel, or a project management tool) to manage the process. This increases efficiency while significantly simplifying workflows.

To assist in the third line of defense, Redboard automates multiple processes around internal audits, external audits, and examinations.  Redboard provides one place for all of your audit related activities and materials. Some credit unions almost exclusively outsource their audit activities to outside firms. Others have an internal team of auditors that they rely on. Regardless of how you run your audits, Redboard provides a home for your audit tasks, deadlines, document requests, and findings.

For both the second and third lines of defense, Redboard makes it easier for business users to participate in the audit process. Most business users don’t understand the differences between each line of defense. Moreover, many have a limited understanding of the audit process and their role in it.

Redboard is dead simple and easy to use, eliminating any barrier of entry for business unit professionals. Redboard’s unified system allows these users to quickly see what’s needed from them—and by when. Plus, it provides a simple way to complete and turn in their tasks, ensuring that they don’t misunderstand their role or how to manage it.

audit checklist

FREE: Audit Checklist for Credit Unions

4 key principles and 13 questions to jumpstart your audit planning. From leading credit unions.

Using Redboard

If you work in the credit union compliance field, then understanding the three lines of defense can help you better prepare for and manage your duties. We created Redboard, our audit management software, to help with just that.

If you’d like to better understand your upcoming compliance risks, try our free, no-obligation credit union audit and examination risk scorecard.

Or, if you’d like to see how Redboard can help you manage examinations, internal audits, and external compliance concerns, request a demo and we’ll be in touch!

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